Financial awareness capsule_sbi_po

www.bankersadda.com | www.careerpower.in | www.careeradda.co.in

FINANCIAL AWARENESS FOR SBI PO EXAM Specially compiled for Bankersadda by Mr. A.K. Gupta, Ex – Chief Manager, PNB

NOV 2013

1. Appointments: Arundhati Bhattacharya takes over as Chairman of SBI and becomes first ever woman to head SBI in 206 years. S R Bansal, has taken over as Corporation Bank’s CMD.

2. LIC gets its first woman MD: The government has appointed Usha Sangwan, executive director (corporate communication) at LIC and V K Sharma, MD and chief executive officer of LIC Housing Finance, as the two new MDs. According to the norms, LIC can have four MDs, and a chairman, as part of its top management. LIC is India’s largest insurer, with 83 per cent market share in terms of the number of policies, and 71 per cent in premium.

3. Forex reserves rise $1.83 bn in a week: Forex reserves rose to $282.95 billion in the week ending October 25.

4. Jignesh Shah quits MCX board, pre-empts FMC action: Jignesh Shah, the founder-chairman of Financial Technologies (FT) who resigned from the MCX-SX board, quit the board of Multi Commodity Exchange of India (MCX) as well. The resignation follows the Rs 5,600-crore payment crisis at NSEL, also controlled by FT.

5. Sept core sector growth signals infra recovery: In early signs of industrial recovery, data for the eight core sector industries’ growth in September 2013, showed a year’s high of eight per cent, against 3.7 per cent in August. In the same month last year, the core sector had recorded 8.3 per cent growth, the highest since January 2009-10. The core sector contributes around 37 per cent to the Index of Industrial Production (IIP).

6. April-Sept fiscal deficit touches 76% of Budget estimate: According to data released by the Controller General of Accounts, at Rs 4.12 lakh crore, the fiscal deficit for the first six months of 2013-14 was 76 per cent of the BE of Rs 5.43 lakh crore. For the corresponding period last year, the deficit stood at 65.6 per cent of the BE.

7. 'Sakala' to cover more services: 'Sakala',

Karnataka government's innovative scheme, which promises timely delivery of government services to citizens, will be expanded to cover more services under various departments. The scheme that has been lauded for bringing transparency and accountability in the system, presently covers over 375 services of 42 departments and organisations of the state government.

8. Karnataka to build 10,000 playgrounds in villages: The project, under which two playgrounds


will be built in each Panchayat, will be taken up with the cooperation of the Departments of Revenue, Education and Sports.

9. State Bank cuts short-term bulk deposit rate as liquidity eases: State Bank of India, the country’s largest lender, has reduced short-term bulk deposit rate by 200 basis points. SBI will offer 6.5 per cent for deposits of Rs 1 crore and above, for seven to 60 days maturity, as compared to 8.5 per cent offered earlier.

10. Parikh panel for Rs 5 hike in diesel prices: The Kirit Parikh committee, asked to revisit the pricing methodology of petroleum products, has recommended to the government an increase of Rs 5 a litre in diesel, Rs 250 a cylinder in LPG (cooking gas) and Rs 4 a litre in kerosene with immediate effect. It also suggested a cap on diesel subsidy by oil marketing companies (OMCs) at Rs 6 a litre, which along with the rise it recommends would collectively save at least Rs 40,000 crore of the government’s subsidy burden. It also recommended to cap subsidised cylinders to each household at 6 from 9 now.

11. Wheat export floor price cut by $40/tone: To enable

swifter movement of wheat stocks from state warehouses, the Union Cabinet has decided to reduce the export floor price from $300 a tonne at present to $260 a tone and to allow export till June 31, 2014, instead of March 31, 2014.

12. Allahbad Bank not to accept deposits from public under West Bengal’s 'Safe Savings Scheme': WBIDFC, a financial services company promoted by the state government of West Bengal, has come out with a scheme for deposits with a minimum amount Rs 1,000. The money can be kept for 12-60 months and will earn 9.00-9.25 per cent interest per annum. The scheme has been launched to offer a secured savings option to rural people in the state, who are often cheated by illegal deposit schemes promoted by swindlers.

13. RBI prescribes Rs 500-cr initial capital for foreign bank subsidiaries: Foreign banks seeking to set up subsidiaries in India would need at least Rs 500 crore as initial paid-up voting equity capital or net worth. Though foreign lenders would be incentivised to convert their branches here into wholly-owned subsidiaries, subsidiarisation wouldn’t be mandatory. The wholly-owned subsidiaries of foreign banks would be given “near-

national treatment”, including for the opening of branches. As of March, 43 foreign banks operated in India, through a network of 333 branches; and, 47 foreign lenders were present in through representative offices. According to its commitments to the World Trade Organization, India has to allow 12 new foreign bank branches in a year.

14. RBI to launch inflation-indexed securities: RBI is set to launch two new instruments by the end of this year — inflation-indexed national saving securities (IINSSes) and cash-settled 10-year interest rate futures (IRFs). However, the 10-year inflation-indexed bonds launched earlier this year, which were linked to the Wholesale Price Index, had failed to attract much interest from investors.

15. RBI shuts special liquidity window for mutual funds: RBI has closed the special window for banks to meet the cash requirements of mutual funds (MFs). It had opened this window in mid-July to help MFs meet sharp redemptions in fixed income schemes, after RBI's move to make it more expensive for participants to borrow short-term money. The special repo window allowed banks to borrow a total of Rs 25,000 crore at 10.25 per cent for MFs.

16. Reserve Bank expects trade deficit to moderate in Q2: India’s CAD widened from 3.6 per cent of gross domestic product (GDP) in the fourth quarter of 2012-13 to 4.9 per cent of GDP in the first quarter of 2013-14. Inflows from foreign institutional investors, which had turned negative since end-May, reversed in September. Since the introduction on September 10 of the swap facility for foreign currency non-resident account (banks) or FCNR(B) deposits and bank foreign borrowings, $6.9 billion and $4.4 billion had been received under the respective schemes until October 25.

17. FinMin relaxes norms for CMD jobs in PSBs: Executive directors (EDs) appointed merely a couple of months earlier would now be allowed to appear in the interviews. Earlier, one needed to have completed a year as ED. However, the criteria for residual service of two years of a candidate hasn’t been changed. A selection committee headed by RBI Governor will interview 19 EDs of various PSBs for six positions that will become vacant in the next financial year, 2014-15. In the present financial year, chairmen of four PSBs will retire. The government is yet to fill vacancies in two, Andhra Bank and Bank of Maharashtra, where the chairman had retired in the past couple of months.

18. Gold smuggling surges with govt's import curbs: Gold worth Rs 130 crore was seized from 383 cases in April-September against Rs 28 crore from 339 cases in the year-ago period, an increase of 360 per


cent in value terms. In volume, it went up from 99 kg to 500 kg in the first half.

19. World Bank slashes GDP growth forecast to

4.7%: The Bank also pegged the current account deficit (CAD) at 4.1 per cent of GDP in 2013-14, significantly higher than the 3.7 per cent hoped by the ministry. The Bank believes the RBI should probably look at core or manufactured product inflation, rather than food inflation, to decide on its monetary stance. The International Montery Fund, had projected GDP to grow 4.25 per cent in FY14. The Prime Minister's Economic Advisory Council (PMAEC) had cut India's growth forecast to 5.3% from its earlier projection of 6.4% for the current financial year. The finance ministry too expects the economy to grow above the 5%. The Planning Commission expects India's economy to clock a growth rate of 5.3 per cent for the current financial year, a shade higher than a decadal low of five per cent in the previous year.

20. India may use forex reserves to finance CAD: According to World Bank, India may have to dip into its foreign exchange reserves to finance the current account deficit (CAD) in 2013-14 but the reserves would still amount to a comfortable import cover of approximately five months.

21. FinMin asks ministries to buy tickets from Air India directly: The move is part of government's austerity measure to restrict the fiscal deficit to the budgeted figure of 4.8% of GDP in 2013-14. However, if it is not possible to obtain tickets directly from Air India/Airlines counters, they may obtain the services of three authorised travel agents -- Balmer Lawrie & Company (BLCL), Ashok Travels & Tours (ATT) and Indian Railways Catering and Tourism Corp (IRCTC).

22. Centre eases eligibility criteria for UMPPs: For setting up ultra-mega power projects (UMPPs), the capital cost requirement for UMPPs used to be 10 per cent of the overall project cost and earlier norms took into account expenditure by prospective developers over five years. Now, the total capital cost requirement, has been brought down to five per cent of the overall project cost and the expenditure incurred by the companies on projects in the past seven years will be counted.

23. End of the road for tax breaks: Union Commerce Minister Anand Sharma has said that the centre would announce a new package without tax incentives for Uttarakhand and Himachal Pradesh. The tax breaks in these states expired on March 31, 2010.

24. E-KYC to be accepted for verification: As per IRDA, the e-KYC (electronic know-your-customer) services operationalised by the Unique Identification Authority of India (UIDAI) will be accepted as valid KYC process for insurance. Earlier, a letter issued by the UIDAI containing details such as name, address and Aadhaar number was a valid document for customer identification.

25. 25 mn small borrowers' data now a click away: Equifax Credit Information Services and High Mark Credit Information Services are the two credit bureaus that collate data from MFIs. So far, details of 100 million loan accounts belonging to 25 million individual customers have been collected. These loan accounts have a gross loan portfolioof Rs 21,300 crore as of June. The data thus collected is used to assess over-indebtedness and instances of multiple lending among borrowers. According to RBI norms, not more than two MFIs or non-banking finance companies should lend to the same borrower with an individual cap of Rs 50,000.

26. RIL first Indian private sector firm to clock Rs 1-lakh-cr sales in a quarter: Reliance Industries became the first private sector company in the country to achieve quarterly turnover or sales of more than Rs 1 lakh crore in a quarter. Its turnover during the quarter stood at Rs 1,06,523 crore, against Rs 93,266 crore in the previous quarter.

27. To unlock FDI, govt to ease lock-in period for realty: Foreign real estate developers, investing in India’s construction sector might be allowed to exit before the mandatory three years stipulated at present. However, for that, they would have to complete the project and procure completion occupancy certificates from local authorities. India allows 100 per cent FDI through the automatic route in townships, housing, built-up infrastructure and construction-development projects.

28. Economy moving towards stagflation: CII survey of CEOs has indicated the economy was moving towards stagflation. Stagflation refers to a situation where economic growth is too low and inflation is too high, leading to high unemployment levels. The situation indicates a dilemma for policymakers, since actions designed to cut inflation may aggravate unemployment.

29. Government lists draft rules to implement Land

Acquisition Act: The rules are with a focus on consent and social impact assessment to ensure the rights of the farmers were protected when the land was acquired. According to the rules, all social


impact assessment documents and consent proceedings will be made publicly available. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 stipulates mandatory consent of at least 70 per cent for acquiring land for Public Private Partnership (PPP) projects and 80 per cent for acquiring land for private companies.

30. Big banks can be dismantled: According to US and UK regulators, even one of the largest global banks could be taken apart safely by US government authorities if it were to fail today. The 2010 Dodd-Frank Act empowered the FDIC (Federal Deposit Insurance Corporation) to seize a firm and dismantle it if regulators think it can't pass through bankruptcy without posing a significant threat to the financial system.

31. Despite negative list, service tax coverage yet to increase: The introduction of a negative list in July 2012 had given the government the power to tax all services, except the 17 on the list. But it was difficult for service tax commissioners to map each activity and determine whether it is a service. The total number of taxable services has increased from three in 1994 to 119 in 2012. Service tax collections accounted for just over 12 per cent of the total tax collections and over 28 per cent of indirect tax collections in 2012-13.

32. Centre to raise wheat support price by Rs 50 a quintal: The Cabinet Committee on Economic Affairs (CCEA) has approved an increase of Rs 50 a quintal in the procurement price of wheat. It will be now Rs 1,400 per quintal for the 2014-15 crop year (April-March). CCEA also approved an increase of Rs 50 for mustard MSP, to Rs 3,050 a quintal. The support price for chana (gram) was raised by Rs 100 to Rs 3,100 a quintal. For masur, the MSP was increased by Rs 50 to Rs 2,950 a quintal and safflower by Rs 200 to Rs 3,000 a quintal. The increase in wheat MSP is the same as recommended by the government advisory body, Commission for Agricultural Costs and Prices (CACP).

33. HSBC to exit Indian retail broking and depository biz: Hongkong and Shanghai Banking Corporation (HSBC) has decided to discontinue its retail broking and retail depository services businesses in India. It was operating these under HSBC InvestDirect Securities (India) Ltd. HSBC InvestDirect Securities (India) is an arm of HSBC InvestDirect (India), which also offers investment advisory services and securities- related financing.

34. Parikh panel says no to export parity for OMCs: The Kirit Parikh committee has ruled out any change in the way of calculating under recoveries on the basis of traded-parity pricing. The export-parity price is the benchmark free-on-board price of products, import-parity pricing includes import duty

and various expenses, such as freight and insurance incurred to import products to India. At present, subsidy is calculated in terms of import-parity pricing — 80 per cent of the import parity price and 20 per cent of the export-parity price.

35. New RTGS system to improve financial market efficiency: According to RBI Governor Raghuram Rajan, the new real time gross settlement (RTGS) system for fund transfers will improve the efficiency of the country’s financial markets, with its advanced liquidity and queue management features. It will have features such as a facility to accept future value dated transactions and options to process multi-currency transactions.

36. RBI sets up advisory panel for national bill payment system: RBI has constituted an advisory group to implement a national bill payment system enabling households to pay utility bills, school fees and remittances using their bank accounts. The group is headed by Umesh Bellur of the Indian Institute of Technology-Bombay. The panel would suggest the nature of the payment platform—either an existing one or through a new entity—for Giro (general inter-bank recurring order)-based bill payments. A Giro is a payment instruction from one bank account to another. It facilitates payments through cash, cheques, credit/debit cards and prepaid payment instruments, transferring funds to the bank accounts of beneficiaries.

37. Govt to give Rs 14,000 cr to PSBs: The government will infuse capital of Rs 14,000 crore in public sector banks (PSBs) this financial year, including Rs 2,000 crore to the State Bank of India and Rs 1,800 crore each in IDBI Bank and Central Bank of India. The banks can raise another Rs 10,000 crore from the market, depending on their requirements through a rights issue, follow-on public issue and qualified institutional placement (QIP).

38. Gujarat govt announces new agriculture power scheme: The scheme is named 'Immediate Power Connection Scheme 2013'. Under the new immediate power connection scheme, applicants will have to bear 80 per cent of the power connection cost and will also have to adopt drip irrigation technique.

39. RBI appoints Technical Committee on Mobile Banking: The Committee will examine the options/alternatives including the feasibility of using encrypted SMS based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country. The Committee will be headed by Shri B. Sambamurthy, Director, Institute for Development & Research in Banking Technology (Chairman).

40. UP promoting guar farming to increase agri income: To maximise farm income and insulate farmers from seasonal losses, Uttar Pradesh


government is promoting guar farming, especially in the arid region of Bundelkhand. Guar provides better returns to farmers compared to other cash crops, including paddy and wheat.

41. FM tells PSBs to step up NPA recovery: Finance Minister P Chidambaram has asked PSBs to monitor 30 big bad debt accounts each.

42. RBI measures got $9.6 bn in forex: India has received over $9 billion from two foreign schemes namely RBI's liberalisation of FCNR(B) and tier-I capital schemes which were announced in Sept to attract foreign funds and help the country bridge the widening current account deficit.

43. Arunachal, Meghalaya to be on railways map soon: Three of the five key railway projects identified by the Prime Minister’s Office (PMO) as “critical” for the region are nearing completion.

44. Discoms' dues to PSUs more than double in 3 yrs: With last year’s restructuring package for loss-making power distribution companies yet to bear fruit, the dues that discoms owe state-owned generation firms jumped to Rs 15,792 crore last month, compared with Rs 6,200 crore in June 2010. Damodar Valley Corporation (DVC), which runs power plants with a cumulative capacity of over 2,800 Mw in Jharkhand and West Bengal, alone accounts for Rs 5,900 crore of the dues.

45. WPI inflation edges up to 6.46% in September: Headline inflation accelerated to a seven-month high of 6.46 percent in September, mainly driven by higher food prices. Wholesale prices, India's main inflation measure, had risen 6.1 percent in August.

46. India becomes leading rice supplier to Singapore: India has overtaken Thailand as Singapore's biggest rice supplier for the first time, exporting 92,865 tonnes or 32.9 per cent of the total rice supply to the island nation in the first eight months of 2013.

47. Financial literacy among urban working young people low: According to a study by IIM Ahmedabad, despite high education levels, working young people in urban India don't fare well as far as financial literacy is concerned. This is likely to be due to the absence of inputs relevant to financial literacy in the general education process.

48. Electronic payment can save 1.6% of India's GDP: According to a World Bank Report, cash can carry significant handling and transportation costs, and run the risks of theft, loss, and counterfeiting. The report stated that individuals and small firms that make use of this technological medium benefit from convenient online authorisations, easier record keeping, and the availability of dispute resolution mechanisms.

49. Industrial output growth slows to 0.6% in August: The growth in July was 2.7 per cent and in August 12, it was two per cent.

50. Health Insurance TPA of India formed, for govt-

owned general insurers: The common in-house third party administrator (TPA) of public sector general insurers, named Health Insurance TPA of India, was incorporated on August 14. The operationalisation is likely to happen by April 2014. This common TPA to process health claims has National Insurance Company, New India Assurance Company, United Insurance Company, Oriental Insurance Company and General Insurance Corporation of India as stakeholders. While the first four have 23.75 per cent stake each, GIC has five per cent. The common TPA has been proposed to prohibit large-scale leakages while settling insurance claims in the health segment. Further, it is intended to process claims of public general insurers in-house, rather than handling by an external agency.

51. 2014-18 growth at 5.9%: According to the Paris-based Organisation for Economic Cooperation and Development (OECD), India is projected to see moderate average annual growth of 5.9 per cent during the 2014-18 period. The forecast for India is much lower than OECD's estimated growth of 6.9 per cent for overall emerging Asia during the same period. Emerging Asia comprises Southeast Asian nations, China and India.

52. UIDAI Bill to give Aadhaar statutory status gets nod: To give a statutory recognition to the Unique Identification Authority of India (UIDAI), the Cabinet has approved a National Identification Authority of India Bill. The proposed legislation seeks to create a National Identification Authority of India, which will oversee the implementation of the Aadhaar project and “regulate it”. It also seeks to define the penalties in case of misuse of the data collected under the UID project. These cover impersonation using Aadhaar data; unauthorised collection or dissemination of information, and unauthorized access to the central database, which will contain all individual details such as biometrics collected for Aadhaar.

53. IMF pegs FY14 growth at 4.25% on weak demand: The International Monetary Fund pegged the country's economic growth at 4.25 per cent. IMF attributed low growth to poor demand and weak manufacturing as well as services sector performance. If India's economy grows by this rate, it would be the lowest economic expansion in 11 years. Before this, the economy grew by lower rate of 4 per cent in 2002-03. IMF also predicted that the


retail-price inflation will remain high at 11 per cent this year owing to food price pressures.

54. Aadhaar-based remittance & query services launched: The National Payments Corporation of India has launched two new services, an Aadhaar-based Remittance Service (ABRS) and a Query Service on Aadhaar Mapper (QSAM). ABRS will enable transfer of funds by using an Aadhaar number. The QSAM service will enable mapping one's status by using an Aadhaar number. There are more than three crore (30 million) Aadhaar-linked bank accounts.

55. Nabard expects to benefit from its new warehousing scheme: Nabard Warehousing Scheme 2013 -14 (NWS) which has a corpus of Rs 5,000 crore, envisages disbursing direct loans for construction of warehouses, silos, cold storage and cold chain infrastructure. The warehouses and cold storage created from this scheme will be compliant to Warehousing Development and Regulatory Authority ( WDRA) norms, which could facilitate pledge loan against stored commodities.

56. FinMin asks public sector banks to ramp up rural ATMs: The PSU banks have put up only 5,726 ATMs by end of August as against the target to install 34,668 by the end of March 2014. Further, Direct Benefit Transfer Scheme, which was initially launched in 25 districts early this year, has been extended to 78 districts. The government has identified 191 districts more to introduce the DBT-LPG scheme, which will be done in a phased manner.

57. RBI allows banks to borrow from international and multilateral financial institutions: RBI has granted permission to banks to borrow from international/ multilateral financial institutions for a limited period of up to November 30. Such borrowings should be for the purpose of general banking business and not for capital augmentation. Such borrowings shall be eligible for the concessional swap facility of RBI.

58. Bharti and Walmart call off their retail JV: Bharti and Walmart, after staying together for six years in cash-and-carry, have decided to independently pursue their retail businesses in India. Walmart will fully own the cash-and-carry business, buying out Bharti’s 50 per cent stake.

59. Aadhaar-linked accounts to be basis for mobile

payments: Government is launching a payment facility where mobile-to-mobile payments could be singularly effected through the Unique Identity (UID) number. Under the Aadhaar-linked payment bridge, individuals’ UID numbers would be linked with their bank accounts at the back-end. A PIN will be used for authenticating debits, putting a layer of security on transactions. The Aadhaar-based remittance system on mobile will make transferring money easy by removing the need to remember bank account details, such as IFSC code, etc, as users will only need their Aadhaar numbers.

60. Bihar registers highest industrial growth among BIMARU states: As per a study by ASSOCHAM, Bihar has registered highest growth rate of 14 percent in the industrial sector during nine years period of 2004-2012 among BIMARU category states -Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. However, lack of land, power and health services and poverty may hamper Bihar's prospects in future.

61. Mandatory training for agents puts pressure on insurers: Licensing rules by Irda stipulate that agents have to undergo 50 hours’ training for basic licence and 75 hours’ training for composite licence. Insurance agents also have to undergo a 25-hour practical training to renew their licence, which is valid for three years. Composite agents will have to undergo a practical training of 50 hours if they want


to renew their licence. According to earlier rules formulated in July 2000, mandatory training was 100 hours for insurance agents and 150 hours for composite agents who were entering the industry for the first time. This was reduced to 50 hours and 75 hours, respectively, in October 2007. The insurers want reduction in training hours. Various estimates suggest approximately Rs 600-650 crore is spent annually by insurance companies on training their agents.

62. RBI may make bank licensing process more frequent: To expand the reach of banking, RBI is considering making the licensing process more frequent and allow free entry of banks as and when necessary.

63. All national, state highways in Punjab to be four/six-laned by January 2016: The Punjab government is working to realise its target of 4/6 laning of all national and state highways by January 2016 and has set aside Rs 3,080 crore for the purpose. This distinction of world-class connectivity would help Punjab to attract more investment and ease traffic on the roads thereby in the coming years.

64. April-Aug fiscal deficit swells alarmingly: Rise in Plan expenditure has pushed the central government’s fiscal deficit to 74.6 per cent of the entire year’s Budget estimate (BE) at the end of only the first five months of the current financial year. The fiscal deficit in the first five months of a financial year was higher than 75 per cent of BE only in 2008-09, when the global financial crisis began. But that year, BE was just 2.5 per cent of GDP and it turned out to be more than eight per cent when the year ended.

65. FM heat on unregulated financial sector: According to Finance Minister, Chidambaram, a financial consumer is comfortable to participate in a regulated market and there should be an assurance that she will be protected. However, exploiting the limitations of the regulatory architecture, ingenious financial engineers come up with innovative products outside the regulatory jurisdiction and deprive the consumers with such products from regulatory protection. There have been five institutional milestones in Indian corporate financial institutions in the last six months — FSLRC report, new Companies Act, the passage of Pension Fund Regulatory and Development Authority (PFRDA) Bill, placing commodity futures market regulation under the finance ministry and the re-promulgation of the Security Laws Amendment Ordinance.

66. SC upholds HC order on CNG to Gujarat under APM: The Supreme Court has directed the Union government to provide compressed natural gas (CNG) to Gujarat on the same rate as it is given to Delhi and Mumbai. But at the same time, the state

government will have to pass necessary laws to make it compulsory for all four wheelers registered in Gujarat to covert to natural gas.

67. India shoring forex reserves to deal with tapering: According to Mr P Chidambaram, Union Finance Minister, India is shoring up its forex kitty to deal with the impact of US tapering. Tapering refers to gradual withdrawal of monetary stimulus by the US Federal Reserve. The reversal of the easy money policy by the US is expected to impact the global markets as well as the economy.

68. NABARD takes to pvt sector financing: National Bank for Agriculture and Rural Development (NABARD) has opened a lending window to the private sector for creation of warehouse space, cold storages and cold chains. This is besides financing to state governments, state government undertakings, (special purpose vehicles) SPVs set up under PPP mode, cooperatives, federations, cooperative federations, (Agricultural Produce Market Committees) APMCs, state-level boards, apex marketing boards' bodies and panchayats for creation of scientific storage space for food grains and other agricultural commodities and perishables.

69. Life insurers get 3 months to phase out old products: The Insurance Regulatory and Development Authority (Irda) has extended the deadline for phasing out old products in the traditional segment to December 31. The earlier deadline was October 1. However, the sale of highest net asset value (NAV) products and index-linked products in the life insurance segment has been banned from October 1.

70. Punjab University steals a march over IITs in

global rankings: According to the Times Higher Education World University Rankings, while Panjab University, is placed at 226 among 400 institutions worldwide, IIT Kharagpur has slipped from 226 to 250 and IIT Roorkee is placed in the 351-400 band. The two other new entrants are IIT Delhi and Kanpur, both in the 351-400 group. India has increased its representation in the world rankings with five world top 400 universities. Overall, California Institute of Technology holds on to the world number one spot for the third consecutive year, while Harvard University tied with Oxford regains second place, pushing Stanford University to fourth. The US remains dominant with seven institutions in the world top 10 and 77 in the top 200 (one more than last year).


71. 5-kg gas cylinders from Oct 5: As part of a series of customer empowering initiatives, the Ministry of Petroleum and Natural Gas is set to commence the sale of five-kg gas cylinders at market-linked prices through selected petrol pumps in major cities. The ministry is also launching portability of LPG connection across oil marketing companies (OMCs) on the same day. The first initiative allows the sale of these LPG cylinders at the market price with minimal paperwork through company- owned retail outlets (petrol stations). Under this portability scheme, a consumer can now opt for the distributor of his choice within a cluster of LPG distributors in the vicinity and across the oil companies.

72. ADB cuts FY14 GDP growth forecast to 4.7%: The multi-lateral agency said the Indian economy has been under pressure with the recent depreciation of the rupee and capital outflows, adding to structural constraints, which is making it difficult for the economy to return to a high growth path.

73. Poor are more trustworthy and bankable: Seeking to promote financial inclusion, Finance Minister P Chidambaram has called upon banks to focus on poor customers who were more trustworthy and "bankable" as compared to large borrowers.

74. RBI forms crack team to help Jalan vet bank licence bids: RBI has nominated three members to the advisory committee formed to scrutinise bank licence applications. Former Securities and Exchange Board chairman C B Bhave, former RBI deputy governor Usha Thorat and central bank board member Nachiket Mor would assist Bimal Jalan, former RBI governor, to vet the applications. The central bank is conducting the initial screening of the 26 applications.

75. India to start power supply to Bangladesh: India will start supplying electricity to Bangladesh through the new transmission line between the two nations. Transmission line will link India's eastern

power grid with the western electricity grid of Bangladesh.

76. India's share in M&As of emerging nations is a mere 5.1%: This is lowest in the BRIC (Brazil, Russia, India and China) nations. China led the emerging market activity with $107.1 billion (32 per cent market share), followed by Russia ($52.1 billion or 15.7 per cent), Brazil ($35.3 billion or 10.7 per cent) and India ($17 billion or 5.1 per cent).

77. Regulators' pay raised by Rs 75,000 a month from July: Chairpersons and full-time members of regulatory bodies would now draw higher salaries, with the Cabinet approving raises of Rs 75,000 a month, with retrospective effect from July. Now, a chairperson would get Rs 4.5 lakh a month (without house and car), against Rs 3.75 lakh earlier. A full-time member would draw Rs 3.75 lakh (without house and car) a month, against Rs 3 lakh earlier. The raises would benefit chairpersons and members of the Securities and Exchange Board of India, the Insurance Regulatory Development Authority, the Telecom Regulatory Authority of India, the Central Electricity Regulatory Commission, the Competition Commission of India, the Pension Fund Regulatory and Development Authority, the Petroleum and Natural Gas Regulatory Board, the Warehousing Development and Regulatory Authority and the Airports Economic Regulatory Authority of India.

78. Clones of existing banks: Finance Minister P Chidambaram has said “several” new banks, licences for which would be issued by the Reserve Bank of India shortly, should have a differentiated approach rather than becoming clones of existing banks. Each one of them should cater to the needs of a special group of customers who do not have banking today. Each one must pursue a different path. While Singapore has five different kinds of licences, Hong Kong has a three-tier structure.

DEC 2013

1. Rich get poorer in India, other emerging nations: According to World Ultra Wealth Report 2013 from UBS AG and Wealth-X, India’s billionaire club shrinks by 5% losing six members to become 103 last year; their combined wealth also declined by the same percentage. Mumbai is home to 30 billionaires, of which, one in three is associated with industrial conglomerates or the pharmaceuticals industry.

2. WTO Bali meet: The Right to Food Campaign, an umbrella of about a 100 non-profit organizations have appealed to the Government to reject the

peace clause proposed by developed countries and safeguard India’s food sovereignty while negotiating at the World Trade Organisation’s (WTO) Bali Ministerial meet to be held from December 3 to 6. The four-year Peace Clause has been proposed by the developed countries as a compromise formula to provide protection to developing countries against penalties for breaching the farm subsidy limit.

3. Bank unions demand 5-day week: Trade unions in the banking sector have demanded 5 days week as part of their bipartite wage


negotiations as there are alternative channels such as ATMs, Internet and mobile banking for banking operations.

4. Reliance Life ties up with five insurance repositories: Reliance Life Insurance Company (RLIC) has tied with all five insurance repositories to provide life insurance policies in electronic form across all its products. The Insurance Regulatory and Development Authority (IRDA) has approved five companies — Database Management Ltd, Central Insurance Repository Ltd, SHCIL Projects Ltd, CAMS Repository Services Ltd and Karvy Insurance Ltd — as insurance repositories (IRs).

5. M. V. Tanksale is IBA’s new chief executive:

M.V. Tanksale, former Chairman and Managing Director of Central Bank of India, has taken over as Chief Executive of the Indian Banks’ Association. Tanksale succeeds K. Ramakrishnan, who was at the helm of the Association for five years up to November 30, 2013.

6. SEBI extends ESOP deadline: SEBI has extended the timeline for employee welfare trusts for aligning their schemes with the SEBI ESOP/ESPS guidelines to June 30 next year. In January 2013, SEBI had prohibited employee welfare trusts from purchasing shares of the company from the secondary market.

7. FMC nod for S. Mishra as MCX Chairman: The commodity market regulator Forward Markets Commission has approved the appointment of Satyananda Mishra (IAS Retd) as the Chairman of Multi Commodity Exchange.

8. India seeks Australia’s help in skills training: As per HRD Minister M. M. Pallam Raju, the availability of good quality trainers is a significant challenge as India raises its efforts to meet the national goal of skilling 500 million people by 2022. The Ministry of HRD has launched an ambitious programme under the national vocation education qualification framework of the AICTE to provide for skill development in schools in classes 9 to 12.

9. Fiscal deficit touches 84% of Budget target:

According to data released by the Controller General of Account (CGA), the deficit in the first seven months of the current fiscal touched Rs 4.58 lakh crore against the target of Rs 5.42 lakh crore for full year. This is 84.4 per cent of the target. This increase is due to low tax collections, while both Plan and non-Plan expenditure has

gone up. Fiscal deficit is mainly the difference between income and expenditure of the Government. Higher deficit means, Government will borrow more from the market. This can drain the liquidity from the market leading to increase in interest rates.

10. Sahoo panel submits review report on GDRs, FCCBs: The M.S. Sahoo Panel that was set up to undertake a comprehensive review of the global depository receipts (GDR) scheme has submitted its report. The committee is understood to have reviewed the GDR scheme of 1993 in the light of legislative changes in the financial sector and macroeconomic developments besides the enactment of a new company law.

11. Threshold limit for e-payment of excise, service tax lowered: The Centre has lowered the threshold limit for mandatory e-payment of excise duty and service tax to Rs 1 lakh from Rs 10 lakhs earlier. With effect from January 1, a manufacturer or a service taxpayer who has paid duty or tax of more than Rs 1 lakh in the previous financial year will be required pay duty or tax through internet banking.

12. Don’t bank on incentives, tax sops: According to Financial Services Secretary Rajiv Takru, Pension funds should look to maximise returns and improve their reach rather than seek incentives and tax breaks.

13. Monitoring MFIs - Self-regulatory organisations get RBI recognition: To ensure effective functioning of Non-Bank Finance Company-Microfinance Institutions (NBFC-MFIs), the RBI has decided to recognise self-regulatory organisations for monitoring such institutions. At present, there are two SROs — Micro Finance Institutions Network (MFIN) and Sa-dhan — monitoring the functioning of NBFC-MFIs in the country. However, SRO as a body was not recognised by the RBI.

14. Foreign banks taking subsidiary route to get capital gains tax exemption: As per RBI, foreign banks that wish to convert their branch holding operations in India into wholly-owned subsidiaries will be exempt from capital gains tax and stamp duty.

15. RBI nod for NHB’s $200-million overseas loan: National Housing Bank has received RBI approval for raising $ 200 million external commercial borrowing under the affordable housing window.

16. Police orders closure of over 1,000 ATMs in Bangalore: Bangalore Police has ordered the shutdown of 1,037 ATM centres in Bangalore. The State Government had ordered banks to post security personnel and install CCTV cameras (both inside and outside) all ATM sites.


17. IRDA plans unique identity code for hospitals:

In a major step to bring down frauds in health insurance, the Insurance Regulatory and Development Authority and the Insurance Information Bureau (IIB) have started an initiative to provide a unique identity code for hospitals. The step will help the health insurance industry streamline and identify the charges for different treatments by different hospitals.

18. Bank frauds rising: Double to Rs 6,212 cr in 2012-13: Bank loan frauds almost doubled in 2012-13 adding up to Rs 6,212 crore against Rs 3,183 crore in the previous year. In terms of numbers, 349 cases of fraud of over Rs 1 crore were reported in 2012-13 up 28 per cent over the previous year’s 273 cases.

19. Sarfaesi Act most effective tool to recover bad loans: According to the RBI’s Report on Trend and Progress of Banking in India, 2012-13, banks have recovered Rs 18,500 crore through the Sarfaesi route. Also, in terms of efficiency, the Act has proved to be more effective than the debt recovery tribunals (DRTs) or mediation by Lok Adalats.

20. RBI troubled by loan quality of banks: In its report, Trend and Progress of Banking in India, 2012-13, the RBI observed that the banking system’s loan quality, primarily in the industrial and infrastructure sectors, has deteriorated significantly during the year and there was an increase in total stressed assets. The banking system’s total stressed assets (bad loans plus restructured standard loans) rose to 9.2 per cent of total advances as on March-end 2013 against 7.6 per cent as on March-end 2012. While the primary driver of the deteriorating loan quality was the domestic economic slowdown, other factors such as delays in obtaining statutory and other approvals as well as lax credit appraisal/monitoring by banks were also significant. Further, higher credit concentration in certain sectors and higher leverage among corporates also increased the stress on loan quality.

21. RBI for diluting Govt stake in public sector banks: As per RBI, the current level of Government shareholding in public sector banks gives it sufficient headroom for diluting its stake in many of these banks. The Government’s shareholding in the 21 public sector banks ranges from 55 per cent to 82 per cent.

22. Private banks racing ahead of public sector ones in setting up ATMs: The total number of

ATMs in the country rose to 1.14 lakh in 2012-13, with the growth primarily driven by private sector banks. Their share in the total increased 38 per cent as of March 2013. Although urban and metropolitan centres accounted for over 65 per cent of the total ATMs, there has been a rising trend in those located in the rural and semi-urban centres in the recent years. India’s largest lender State Bank of India topped in the number of ATMs at 32,777 as on September 30. Among the private sector banks, Axis Bank had the highest number at 11,796.

23. Weak rupee has no significant impact on creditworthiness: According to Fitch Ratings, the spillover effects of a weaker rupee have not significantly hurt India’s creditworthiness, and hence would not trigger any rating action at this point.

24. Complaints against foreign, private banks on the rise: A per RBI Report on Trend & Progress of Banking 2012-13, despite the common perception of dissatisfaction from services of public sector banks, the per bank branch/account number of complaints in the last fiscal was higher for foreign and private sector banks. In 2012-13, there were 1,543 complaints per 100 bank branches of foreign banks, highest among all bank groups. Complaints in Tier-I cities — New Delhi, Mumbai, Chennai, Kolkata, Bangalore and Hyderabad — account for more than half the total complaints received by 15 Banking Ombudsman offices.

25. Banks’ investment in G-Secs must come down gradually: As per RBI, it is necessary to reduce banks’ requirements of investing in government securities in a calibrated way, to what is strictly needed from a prudential perspective. The scope for such reduction will increase as government finances improve.

26. First bank for women: Bhartiya Mahila Bank has started operations. Usha Ananthasubramanian, is the bank’s first Chairperson and Managing Director. BMB, has been set up with a capital base of Rs 1,000 crore.

27. 29 developers get more time to complete SEZ projects: Twenty-nine developers of Special Economic Zones (SEZ), including Tata Consultancy Services, Navi Mumbai SEZ and Parsvnath have been given more time by the Government to execute their projects. Global slowdown and fluctuating market conditions were among the top factors cited by the developers for the delay in their projects.

28. Banking on low-cost outsourcing model: Bharatiya Mahila Bank (BMB) is the only bank to be built completely on a low-cost outsourcing model. While the bank will focus on acquiring and servicing customers and speeding up the


process of financial inclusion through the low-cost outsourcing model, back-end services such as debit and credit card management, digital and mobile banking, asset-liability management and ATM management will be taken care of by US-based banking technology company FIS.

29. Moody’s maintains negative outlook on banking sector: UBS downgraded India to ‘neutral’ from ‘overweight’ even as it upgraded China to ‘overweight’. Global ratings agency Moody’s Investors Service maintained its negative outlook on India’s banking system, reflecting the negative effects of currency volatility, persistent inflation and slowing economic growth.

30. Process of deregulating diesel prices will continue: As per Veerappa Moily, Minister of Petroleum & Natural Gas, had it not been for the steep fall in the rupee recently, he would have completed the process of diesel deregulation.

31. Bharat Ratna for Sachin, C.N.R. Rao: The Union Govt has announced conferring the Bharat Ratna on Sachin Tendulkar who becomes the first sportsperson to receive the nation’s highest civilian honour. Eminent scientist C. N. R. Rao has also been conferred the award.

32. Bancon 2013: Bankcon held in Mumbai was hosted by Bank of India. The theme of the conference was ‘Banks of the future: Gearing up to meet the emerging environment’.

33. Withdrawal of application for New Bank: RBI had, on July 1, 2013 placed on its website a list of 26 applicants for new bank licences in the private sector. The following applicants have withdrawn their applications for establishment of New Banks as per RBI policy – (a) Tata Sons Limited; (b) Value Industries Limited, Aurangabad. Application of K. C. Land & Finance Ltd., Chandigarh has been included in the list.

34. RBI extends Liquidity Support to Micro, Small and Medium Enterprises: RBI has decided to provide refinance of an amount of Rs 5,000 crore to the Small Industries Development Bank of India (SIDBI). The refinance will be available for direct liquidity support to finance receivables, including export receivable, to MSEs by SIDBI or for liquidity support to MSEs through selected intermediaries, that is, banks, Non-Banking Financial Companies (NBFCs) and State Finance Corporations (SFCs). The refinance will be available against receivables, including export receivables, outstanding as on November 14, 2013 onwards. The facility will be available at the prevailing 14-day term repo rate for a period of 90 days. During this 90-day period, the amount can be flexibly drawn and repaid. At the end of the 90-day period, the drawal can also be rolled

over. The refinance facility will be available for a period of one year up to November 13, 2014.

35. Chakrabarty blames public sector banks for sitting on bad loans: As per RBI Deputy Governor K.C. Chakrabarty, public sector banks sat on NPAs far longer than their private sector counterparts. According to him, (a) NPAs had started rising from 2007, before the financial crisis; (b) Private sector banks and even foreign banks have been able to deal with the NPA menace better and these banks identified the problem earlier; (c) when regulations are tightened, asset quality improves; (d) Prudential norms (like higher provisioning) are in the interest of the banks; (e) for government companies, the project appraisal has to be more stringent. The more powerful the borrower, the appraisal has to be more stringent.

36. Onion, food items push wholesale inflation to

8-month high of 7%: The Wholesale Price Index (WPI) for October rose to 7 per cent from 6.46 per cent in September. The retail inflation, represented by the Consumer Price Index (CPI), rose 10.09 per cent in October from 9.84 per cent in September.The core inflation (reflecting mainly prices of manufacturing goods) also rose to 2.6 per cent in October from 2.1 per cent in September. Costlier vegetables, especially onion, and food articles are to blame for the wholesale price and retail inflation.

37. Bad loans of 40 listed banks rise 38% in H1: The net NPAs of 40 listed banks as on March 31, 2013, were Rs 93,109 crore, which rose to Rs 1,28,533 crore as on September 30, 2013. Of the 40 listed banks, 14 have reported more than 50 per cent jump in net NPAs. period.

38. Power sector fuels modest recovery in factory output: Industrial production recorded a growth of 2 per cent in September against a contraction of 0.7 per cent in the same month last year. Industrial production in August was up 0.4 per cent. The IIP growth came mainly from the power and mining sectors, while manufacturing was only marginally better. The consumer durables segment contracted 10.8 per cent in September.

39. Exports surge in Oct: Rising demand from the US and the EU helped India’s merchandise exports grow for the fourth month. Exports posted a robust 13.47 per cent growth to $27.27 billion in October 2013. Imports continued to decline bringing down the trade deficit to $10.5 billion during the month. This is almost half the $20.21 billion registered in October 2012.


Exports during the April-October period grew 6.32 per cent to $179.37 billion. Imports at $270 billion were lower by 3.8 per cent.

40. IRDA to set up insurance clearing house: IRDA will set up an Insurance Clearing House to ensure timely and effective reconciliation of inter-company reinsurance and coinsurance balances and efficient settlement of these balances. The clearing house will be registered as a public limited company under the Companies Act, 1956. It will have a minimum paid-up share capital of Rs 100 crore.

41. Posco gets more time to complete Odisha SEZ: South Korean steel major Posco has got time till next year to acquire land and disburse compensation for its proposed multi-product Special Economic Zone in Odisha. Posco proposes to invest $12 billion in the SEZ, one of the largest foreign direct investments to be brought into the country.

42. The SEZ project proposes to produce 63,48,000 tonnes of finished steel products per year and provide direct employment to about 18,000 people and indirect employment to 30,000 more.

43. Oxford arm to set up university in Sanand with Whistling Group: The university, which opened its portals in 1096, is planning a higher-education campus through its wholly-owned subsidiary, Isis Innovation Ltd. Isis will be partnered by the Whistling Group. This independent, industry-focused university will offer courses in alternative energy and environmental studies.

44. CSIR set to open TechVills in rural areas: The Council for Scientific Industrial & Research (CSIR) is gearing up to establish a chain of 28 TechVills in rural areas. These TechVills, to be spread across the country, will showcase technologies suitable for application in specific areas.

45. Govt plans survey-based data collection for services sector: The Central Statistics Office (CSO) and the Directorate General of Commercial Intelligence & Statistics (DGCIS) are conducting domestic pilot surveys on services data collection in areas such as tourism and health. India, like many other developing countries, has inadequate data on services. It is a big handicap while negotiating Free Trade Agreements with other countries and also framing domestic policies for the sector.

46. Competition panel okays Jet-Etihad deal: The Competition Commission of India has given clearance to sale of stake by Jet Airways to Etihad Airways. The Commission is of the opinion that the proposed combination is not likely to have appreciable adverse effect on competition in India.

47. Vegetables push retail inflation over 10%:

The Consumer Price Index (CPI) touched 10.09 per cent in October, up from 9.84 per cent in September. Prices of vegetables shot up a 45.67 per cent against 10.74 per cent in October 2012.

48. Retailers seek fixed 20% margin on drugs: According to retailers, due to drastic cut in prices of about 350 drugs following the Drug Price Control Order, their gross average margins fell to 14-16 per cent and that of stockists to 8.5 per cent.

49. Capital infusion by Govt is key to PSU banks’ ratings: As per India Ratings & Research, public sector banks would depend more on capital infusion from the Government, as their capital ratios could be impacted by falling internal accruals along with pressure on loan portfolio. The Government and Life Insurance Corporation of India (LIC) injected about 95 per cent of equity into banks between FY10 and FY13. Any dilution in the Government’s stance due to fiscal pressures could have an immediate impact on the ratings of weak banks. The Prime Minister’s Economic Advisory Council, has suggested that the Government to dilute its stake in its banks to raise Rs 55,000 crore for equity injections.

50. SEBI panel for hiking mutual funds net worth to Rs 25 cr: Market regulator SEBI’s mutual fund advisory committee has recommended that fund houses with assets under management (AUM) of over Rs 1,000 crore should have a net worth of Rs 25 crore. The current net worth requirement for an asset management company (AMC) is Rs 10 crore. The committee has also suggested Rs 25 crore as the minimum net worth for new applicants.

51. Inclusion of labour norms in free trade pacts

on the rise: According to a report by ILO, more countries are now ensuring that Free Trade Agreements lead to better working conditions. It found that 58 trade agreements included labour provisions in June 2013, up from 21 in 2005 and four in 1995.

52. Company Secretaries may soon be called governance professionals: As per Corporate Affairs Minister Sachin Pilot, the Government would move amendments in Parliament for a


new nomenclature for company secretaries – governance professionals. The Govt is sharpening supervision of compliance procedures by corporates through the proposed National Financial Regulatory Authority.

53. Indian billionaires only half as wealthy as Chinese counterparts: According to the report on ultra high net worth individuals published by Wealth-X and UBS, India is home to 103 billionaires with a combined wealth of $180 billion, six fewer individuals than the year before. By contrast, China’s billionaire population grew by 10 to 157, with a total wealth of $384 billion. The US has the largest number of billionaires, 515, representing nearly a quarter of the total global billionaire population, with a combined wealth of $2,064 billion. Mumbai is home to 2,135 of India’s richest individuals, followed by New Delhi (1,980), Bangalore (1,980), Kolkata (635), Hyderabad (540) and Chennai (385).

54. Life insurers back on growth path after 3 years: According to IRDA, after three years of decline, life insurance business is back on the growth path. The industry witnessed a steep fall in business after the introduction of new guidelines in September 2010 for unit-linked insurance plans, stipulating, among others, lower commission for agents and higher lock-in periods . Unit-linked plans, at that time, accounted for over 80 per cent of business of private life insurers.

55. Commerce Ministry allays fears on free trade pacts: The Commerce & Industry Ministry has clarified that India’s Free Trade Agreements (FTAs) with most trading partners have resulted in an increase in exports and not caused any adverse impact on the manufacturing sector. Most regional and bilateral FTAs signed by India either related to SAARC countries or to South East Asia and North East Asia. In case of SAFTA, India has a trade surplus of about $12 billion. With Asean, exports have more than doubled after signing of the Indo-Asean Trade in Goods Agreement in 2009, though imports have also grown. A significant part of India’s imports from this region were in essential items such as edible oils from Malaysia and Indonesia and petroleum products and coke from Indonesia.

56. India, US launch agri training programme with Africa: The US and India have launched the third India-US-Africa triangular agricultural training programme at the National Institute of Agricultural Extension Management (MANAGE) Hyderabad. This partnership, supported by the US Government’s global hunger and food security initiative ‘Feed the Future’, aims to improve agricultural productivity and support market institutions in Kenya, Liberia, and Malawi.

57. S&P affirms BBB-minus rating and negative outlook: Global rating agency Standard & Poor’s has affirmed its ‘BBB minus’ sovereign rating for India, but the outlook remained negative. ‘BBB minus’ is the last investment grade. A notch lower will not only hurt foreign investment flows, but Indian companies will also have to pay more to borrow abroad. Giving reasons for affirming the rating, the agency listed strengths such as low external debt, ample foreign exchange reserves and an increasingly credible monetary policy. But these strengths, were counter-balanced by the onerous burden of its public finance, lack of progress on structural reforms and shortfalls in basic services.

58. Service tax noose to tighten on specific sectors: The Finance Department will closely monitor service tax compliance in sectors identified as ‘chronic tax evasion’. These sectors include renting of immovable property, construction and real estate, information technology, mining, advertisement and storage and warehousing.

59. Direct plans of mutual funds not a hit with retail investors: From January 1, 2013, all mutual funds were asked to offer a new Direct Plan with their schemes so that investors could bypass the services of a distributor, save on costs and thus earn higher returns from their funds. But 10 months on, while a good number of institutions and affluent investors have moved their money into direct plans, very few retail investors have made the shift.

60. CAG becomes member of UN audit panel: The Comptroller and Auditor General of India Shashi Kant Sharma has been elected to the coveted United Nations Board of Auditors for a six-year term. India will replace China beginning July 1, 2014. The CAG of India will now get access for audit of the UN organisations, including the UN Headquarters. India was earlier in the Board for six years from 1993.

61. US pushes India again for early phase-out of textile sops: India will have to start phasing out its textile subsidies soon to conform with the Subsidies Agreement of the World Trade Organisation. While export subsidies are prohibited under WTO rules, the multilateral trade body allows countries with per capita income below $1,000 to give such incentives till exports are lower than 3.25 per cent of world trade in that particular commodity. India’s share in the global market for textiles crossed the limit in 2007, according to WTO records, and is almost four per cent at the moment. However, since countries are given eight years to remove the subsidies, India has time till 2015 to do so.


62. Oil Ministry wants FinMin to cut taxes on branded petrol, diesel: The Ministry of Petroleum & Natural Gas has requested the Finance Ministry to review the duties levied on branded auto fuels (petrol/diesel) to bring down the price differential with non-branded or regular fuels. This, will attract consumers to branded fuels, which will help improve fuel efficiency by about two per cent, resulting in reduction in overall demand.

63. PM’s panel will drive execution of infra projects: The Prime Minister’s Project Monitoring Group will start supervising the implementation of 99 infrastructure projects, with investments worth Rs 3.6-lakh crore, already cleared by it. The projects, cleared by the PMG and the Cabinet Committee on Investments, include Sterlite Energy Ltd’s project worth Rs 12,000 crore, Adani Mundra’s thermal power plant worth Rs 9,900 crore, Lanco’s Rs 6,000-crore facility, Mumbai Airport’s new terminal worth Rs 12,000 crore and Jhajjar Power Ltd’s project worth Rs 6,600 crore. Bank funds worth about Rs 7-lakh crore are locked in these projects that were stuck due to various reasons, including environment clearance.

64. UK’s decision to scrap visa bond: The British government has decided to scrap a controversial £3,000 visa bond scheme for six Commonwealth nations, including India.

65. Top 200 firms have fewer than 10% woman staff: According to a survey by CII, women employees account for less than a tenth of the workforce in more than half of the top 200 companies by market capitalization. Such companies mainly operated in sectors such as mining, manufacturing, oil exploration, construction and engineering. About 20 per cent of the companies had women employees accounting for 10-20 per cent of their staff strength. Another 12 per cent of the companies – mainly in the service sector had female staff ranging between 20 and 40 per cent of their workforce. Also, half of the companies surveyed had at least one woman on their board of directors. The Companies Act stipulates appointment of at least one woman on the board of a company.

66. Mars Orbiter lifts off successfully, begins 400-

million-km journey: India’s maiden mission to Mars blasted off on 5th Nov from launch pad at the Satish Dhawan Space Centre at Sriharikota in Andhra Pradesh.

67. Jignesh Shah quits MCX: Jignesh Shah, promoter of troubled National Spot Exchange Ltd (NSEL), has stepped down as Non-Executive Vice-Chairman of MCX. Shah, who recently quit from the board of MCX Stock Exchange, also heads Financial Technologies as Chairman and Group CEO.

68. New Chairman for National Payments Corp: M. Balachandran has been appointed chairman of National Payments Corporation of India (NPCI), taking over the reins from Infosys’ N. R. Narayana Murthy.

69. CAD will be below $70 b this fiscal: According to C Rangarajan, Chairman of the Prime Minister’s Economic Advisory Council, India may contain the current account deficit for 2013-14 below $70 billion, lower than 2011-12 level.

70. Manufacturing shrinks for third straight month: HSBC’s manufacturing purchasing managers’ index for India remained unchanged in October, staying below 50 for the third consecutive month. The index in October was at September’s level of 49.6.

71. G.K. Pillai appointed Chairman of MCX-SX: MCX Stock Exchange (MCX-SX) has appointed Gopal Krishna Pillai, IAS (Retd), as the Chairman and Thomas Mathew T, as Vice-Chairman of its board of directors.

72. FDI may soon be allowed in e-retail services: The Government may widen the scope of foreign investment in e-retailing by allowing FDI in services such as selling of financial products and rail-ticket booking, in addition to transacting in goods.

73. FIPB eases defence FDI norm: The Foreign Investment Promotion Board (FIPB) has decided not to reject proposals from a foreign company only because it or any of its group companies or their parent is under investigation in the country or abroad. Clearance will be given without prejudice to any existing or future civil or criminal proceedings against the foreign investor or its parent.

74. Decoding the numbers that drive food

inflation: Food inflation has increased since the beginning of 2012. The rate of retail food inflation for urban households has been higher than the wholesale food inflation rate in recent months. The general increase in food inflation is being driven by protein-rich eggs, fish and meat, which have experienced volatile but high inflation; and, above all, vegetables. Other major components of spending, like fuel and light, have


seen a reduction in the overall inflation in the past two years but, sufficiently high to keep the retail inflation rate close to double digits. Retail inflation remains significantly higher than wholesale inflation and is much higher than core inflation in particular, which has been sharply reduced by policy and the slowdown.

75. Banks send notice to Delhi Airport Metro for payment of dues: A consortium of lenders led by Axis Bank which have a total exposure of Rs 1,800 crore has sent a notice to Delhi Airport Metro Express Pvt Ltd (DAMEPL) for payment of loans which have turned into non-performing assets. The notices have been served on Reliance Infrastructure Ltd and Delhi Metro Rail Corporation (DMRC).

76. RBI asks banks to increase bad loan provisions: The banking system’s provision coverage ratio (PCR) has dropped below 50 per cent, compared with 70 per cent two years ago. RBI expects banks to maintain a high level of overall provision, over and above the regulatory requirement for individual loan losses. Internationally, provisioning is 70-80 per cent.

77. NCAER report pegs fiscal deficit at 5.1%: The National Council of Applied Economic Research (NCAER) has pegged the government’s fiscal deficit for this financial year at 5.1 per cent of gross domestic product (GDP), against the finance ministry’s estimate of 4.8 per cent. The GDP growth is estimated at 4.8-5.3 per cent in 2013-14.

78. RBI to overhaul debt recovery process: Speaking at Bancon 2013, RBI Governor Raghu Ram Rajan said that RBI will announce measures to ensure fair recovery for bankers and investors, and to punish those trying to milk the system. Other observations by him included – (i) Promoters were taking undue advantage of the debt restructuring process; (ii) Bank management with limited tenure keeps on extending and evergreening a loan so that one’s successor has to deal with it; (iii) the practice of transfer of top management among public sector banks (PSBs) could be reviewed; (iv) Country’s industrial sector had come a long way and there was no need to enter free-trade agreements that give foreign manufacturers an undue advantage, but there is no reason to give domestic manufacturers protection.

79. Pakistan hints at MFN status, allowing more products from India: The negative list which became operational from March 21 last year contains 1,209 items that India cannot export to Pakistan, including pharmaceutical and agricultural products. India can export around 7,500 items there. Pharmaceutical and

agricultural items are likely to be allowed to be imported.

80. Inflation control still RBI's main agenda: As per deputy governor of RBI, K C Chakrabarty, cost of money is high whenever inflation is high and growth is not sacrificed because of high interest rates. Growth is sacrificed because of high inflation. People will not save if the rate of return is lower than inflation. If banks have to give higher rates for mobilising deposits, then they cannot lend money at lower rates.

81. FM wants bank licences to go to those with

innovative models: According to Finance Minister P Chidambaram, the new banking licences, expected to be given in January, would be issued to applicants with innovative and different banking models. According to FM, banks are required to cater to different sections like communities, tribal populations, Northeast, urban poor, rural poor, farmer families, women. It is, therefore, necessary to promote banks that cater to these individual segments of people.

82. Banks' exposure to shadow banking entities up in India: According to an international body of financial regulators, India is among the nations which have witnessed a marked increase in the exposure of its banks to 'shadow banking' entities, whose asset base globally grew to $71 trillion in 2012-end. Shadow banking system refers to credit intermediation involving entities and activities outside the purview of the regular banking system.

83. Yogesh Agarwal's term as pension regulator cut short: Yogesh Agarwal, chairman of the Pension Fund Regulatory and Development Authority (PFRDA), resigned about one-and-a-half years before the end of his tenure.

84. India's netizens set to be world's second-biggest internet user base: According to a report released by the Internet and Mobile Association of India (IAMAI) and market research firm IMRB International, by June 2014, Indians might outnumber American internet users to become the world’s second-largest online community after China.

85. Low cost distribution channel needed for 'Bank of future': According to McKinsey report, ‘Reimagining Banking in India: Gearing up to meet the new environment’, banks need innovation in their distribution channels to cater to changing customer preferences, as well as improve productivity and cost-efficiency. Total


loans (as percentage GDP) extended to all segments increased 103 per cent, from 0.29 per cent in 2003 to 0.59 per cent in 2013. However, despite the presence of nearly 90 scheduled commercial banks in India, the extent of access is still low, with about 35 per cent of India’s population financially excluded, and only 28 per cent of total bank retail credit being channelled to rural and semi-urban areas, which constitute 87 per cent of the population. To become a “bank of the future”, banking players should innovate in three aspects---customer insights and proposition, distribution and risk architecture. Banks should leverage digital banking to cater to high-value customers.

86. HRD ministry to set up 120 community colleges: The human resource development ministry will set up 120 community colleges, based on community colleges in the US, to provide academic and vocational training. India has a gross enrolment ratio of 19 as compared to a global average of 29.

87. Life insurers rush to revive lapsed policies: A policy is considered lapsed if the premium is not paid within the grace period. According to Insurance Regulatory and Development Authority (Irda) recommendations, a uniform grace period of 30 days is extended for annual, half-yearly and quarterly renewals, and 15 days for monthly renewals. Renewals not just boost renewal premiums, but also improve the overall persistency rates of the life insurers. Persistency is an indicator of the percentage of policies that an insurer is able to renew in the 13th, 25th and 37th and 49th month of the policy term.

88. Centre plans 4 solar UMPPs of Rs 90,000 cr: The Centre has proposed four ultra mega solar power projects (UMPPs). These would be in Rajasthan (4,000 Mw), Gujarat (4,000 Mw), Kargil (2,000 Mw) and Ladakh (5,000 Mw). These would cost Rs 90,000 crore.

89. Sumit Bose to become finance secretary: Ratan P Watal is set to be the expenditure secretary, while Revenue Secretary Sumit Bose would be finance secretary on the retirement of R S Gujral towards end of Nov 13.

90. Govt tells states to lower levy rice quota for PDS: In a move that could increase the supply of rice in the retail markets, the Centre has directed states to reduce quota for levy rice, sold for public distribution system (PDS), from the existing 30-75 per cent to 25 per cent of the total produce of millers in the current procurement season. The government gets the rice for the central pool to be distributed through PDS by two ways: Custom-milled and levy rice. In CMR, the government purchases husked rice from farmers and then allocates it to mills for

processing for a fixed charge and rebuys again from them. In the levy rice policy, millers are allowed to sell a certain percentage (25–70 per cent in major rice producing states) of rice procured by them in the open market, while the remaining (called levy rice) is collected by government agencies at a minimum support price (MSP).

91. RBI hikes ways and means advances limit of states: The aggregate normal Ways and Means Advances (WMA) limit for the state governments has been increased by 50 per cent to Rs 15,360 crore. The current limit for state governments and the Union territory of Pondicherry is at Rs 10,240 crore for the year 2013-14.

92. PM's council wants govt to cut stake in banks to 51%: The Prime Minister's Economic Advisory Council has recommended phased dilution of government stake in public-sector banks, from 58 per cent to 51 per cent, and introduction of on-tap licensing of new banks. The stake reduction would help raise the additional capital required to implement the Basel III norms.

93. Up to 10,000 killed in Philippines by super typhoon Haiyan: Super typhoon Haiyan destroyed about 70 to 80 percent of structures in its path. Nearly 480,000 people were displaced and 4.5 million "affected" by the typhoon in 36 provinces.

94. India to host 2 key multilateral meetings: The

first would be a trilateral dialogue between the


foreign ministers of Russia, India and China, or RIC, staring November 10. India would also host another key meeting, the Asia-Europe Meeting (ASEM) from November 11-12, with 36 foreign ministers and 12 deputy foreign ministers from Asia and Europe participating. ASEM represents about 60 per cent of the world’s population, 52 per cent of the global gross domestic product and 68 per cent of global trade.

95. Forex reserves fall to $281.29 bn: India's foreign exchange reserves fell in the week ending November 1 by $1.66 billion to $281.29 billion.

96. India Inc sees red on voting rights for preference shares: The Companies Act, 2013, gives the same voting rights to preference shareholders as to equity capital holders. This will impact voting rights of all those companies whose preference share capital is larger than their equity capital. However, the Act is silent on whether this will be with retrospective or prospective effect.

97. Centre sets Rs 1-lakh-cr retail loan disbursal target for PSBs: The finance ministry expects public sector banks to disburse about Rs 1,00,000 crore of consumer loans at low rates.

98. RBI signs cooperation pacts with central banks of Australia & NZ: RBI has signed cooperation agreements with the central banks of Australia and New Zealand for exchange of information. With this, the apex bank had signed such MoUs with 18 supervisors. The MoUs provided for sharing of information on the health of the supervised entities, cooperation between the supervisors during on-site examinations, frequent meetings between the supervisors and preserving the confidentiality of information shared.

99. FinMin shortlists EDs for top job in six govt banks: The Union finance ministry has

shortlisted the names of executive directors (EDs) likely to head public sector banks (PSBs) in 2014-15. The banks whose CMDs are likely to retire in 2014-15 include Bank of Baroda (BoB), Indian Overseas Bank (IOB), Canara Bank, Oriental Bank of Commerce (OBC), Vijaya Bank and United Bank of India.

100. Foreign bank subsidiaries get M&A, branch freedom: As per guidelines issued by RBI, Wholly Owned Subsidiaries of foreign banks could acquire domestic private-sector banks, as well as set up branches anywhere in the country. These WOSes might be permitted to enter into merger & acquisition (M&A) transactions with any private bank in India, subject to the overall foreign investment limit of 74 per cent. The current law permits foreign investors to hold up to 74 per cent stake in an Indian private bank, but it does not allow a single entity to own more than five per cent share in a local lender. Currently, foreign banks need RBI’s permission to open branches in the country. According to its commitments to the World Trade Organization, the central bank is required to allow only 12 new foreign bank branches in a year. At present, 43 foreign banks have only 334 branches — mostly in cities — less than 0.5 per cent of the banking system’s total branch network.

101. Cyprus blacklisted for not sharing tax info: The Centre has blacklisted Cyprus for not sharing information about tax evaders. This would make it difficult for Indian residents to do business with the tax haven.

JAN 2014

1. Sumit Bose is new Finance Secretary: Sumit Bose, has been designated as the new Finance Secretary. He will continue to hold the post of Revenue Secretary.

2. Harsh Bhanwala is new Nabard Chairman: The Centre has appointed Harsh Kumar Bhanwala as Chairman of the National Bank for Agriculture and Rural Development (Nabard). Prior to this appointment, Bhanwala was an Executive Director at India Infrastructure Finance Company Ltd (IIFCL), a state-owned infrastructure lender. Bhanwala, succeeds

Prakash Bakshi, who retired as Nabard Chairman in September.

3. C.V.R. Rajendran appointed CMD of Andhra

Bank: Prior to this elevation, Rajendran was executive director at Bank of Maharashtra.

4. Arun Tiwari new CMD of Union Bank: The Union Government has appointed Arun Tiwari as


Chairman and Managing Director of Union Bank of India. Prior to this elevation, Tiwari was an executive director at Allahabad Bank.

5. Chairman IBA: K R Kamath is the Chairman of Indian Banks Association.

6. Gold traders opt for jewellery imports to tackle curbs on bullion:

7. Though Gold bullion attracts import duty of 10 per cent, and duty on gold jewellery is 15 per cent, yet conditions attached to bullion imports like ‘80:20 scheme’, under which merchants were to re-export 20 per cent of each gold consignment before ordering fresh shipments makes import of bullion difficult.

8. Ministry clarifies on role of shares held in fiduciary capacity: According to Corporate Affairs Ministry, shares held by a company in a fiduciary capacity should not be counted for the purpose of determining holding-subsidiary relationship. Further, the powers that a company can exercise in another company in a fiduciary capacity (only in the capacity as a trustee) will be excluded for determining holding-subsidiary relationship.

9. Bank of India plans to get into merchant banking: Bank of India is planning to enter the merchant banking space via BOI Shareholding Ltd. Public sector banks which have a merchant banking subsidiary include State Bank of India, IDBI Bank and Bank of Baroda.

10. Pradeep Kumar is new MD of SBI: P. Pradeep Kumar has been appointed by the Government as Managing Director of State Bank of India. Prior to his elevation, Kumar was the Deputy Managing Director and Group Executive of the Corporate Banking Group in India’s largest bank.

11. Cabinet nod for cancer institute at Jhajjar: The Union Cabinet, has approved the proposal to set up a National Cancer Institute at a cost of Rs 2,035 crore. The institute, which would be set up at the Jhajjar campus of the All India Institute of Medical Sciences in Haryana, is likely to be completed within 45 months.

12. Insurance broking: In major relief to insurance companies without bancassurance partners, the finance ministry has asked all public sector banks to act as insurance brokers to boost insurance penetration in the country. Currently, insurance penetration (the ratio of the percentage of total insurance premia to gross domestic product) is about five per cent. The ministry has advised banks to leverage their branch network for insurance penetration. The corporate agency model should be done away with and each bank to train and orient its staff to conform to new provisions. Currently, bancassurance follows the corporate agency model, through which a bank

can only tie up with one life, one non-life and one health insurer to sell their insurance products. Therefore, non-bank promoted insurance companies and late entrants to the insurance sector do not have any bank partner to sell their policies. As an insurance broker, a bank is liable to consumers, in terms of an insurance policy, unlike a corporate agent. The liability is high, especially as the bank will sell products of multiple insurers. The customers will now have more choice while buying insurance from banks. The Finance Ministry has set January 15 as the deadline for banks to start selling products of more than one insurance company.

13. 8.8 m families live in urban slums: As per a survey conducted by National Sample Survey Office (NSSO), about 8.8 million household in India live in urban slums. A total of 33,510 slums are present in urban India, of which 41 per cent are notified as slums by the concerned municipalities, corporations, local bodies or development authorities which accommodate about 63 per cent of all slum-dwelling households. Maharashtra, accounts for 23 per cent of all slums in the country. With 13.5 per cent of slums, Andhra Pradesh comes second, followed by West Bengal (12 per cent).

14. Over 80% of rural homes have power, but 60% have no toilets: As per Government data, 80 per cent of rural households and 97.9 per cent urban households had electricity for domestic use, and 88.5 per cent households in rural India and 95.3 per cent in urban areas had improved source of drinking water. The percentage of households who get drinking water facilities within premises was 46.1 per cent in rural India and 76.8 per cent in urban India while about 62.3 per cent of rural households and 16.7 per cent of urban households did not have any bathroom facility. 59.4 per cent and 8.8 per cent households in rural and urban India, respectively, had no latrine facilities.

15. Govt draws up list of 23 countries for currency swap arrangement: The Commerce Ministry has finalised a list of 23 countries with which India can trade in local currencies to save precious foreign exchange and strengthen the rupee. The list includes oil exporting nations such as Angola, Algeria, Nigeria, Oman, Iran, Iraq, Venezuela, Qatar, Yemen and Saudi Arabia. Other countries on the list include Russia, Japan, Singapore, Australia, Indonesia, South Korea, Malaysia, Mexico, South Africa and Thailand. A currency swap arrangement for trade basically involves trading in local currencies where countries pay for exports and imports with


domestic currencies at pre-determined exchange rates instead of trading in US dollars.

16. Women gaining ground in banks’ financial inclusion: The share of female depositors has increased to 28 per cent of the total number of individual deposit accounts in 2012 against 24 per cent in the previous year. The total number of individual deposit accounts in the country stood at 77.32 crore in 2012 against 72.50 crore in the previous year. In terms of amount, women’s share in the total individual deposits has improved to 26 per cent in 2012 from 22 per cent in 2011. In 2012, individual deposits aggregated Rs 30.78 lakh crore against Rs 28.05 lakh crore in the previous year. The share of female loan accounts in the total number of loan accounts has gone up to 15.82 per cent in 2012. Women’s share in the total outstanding loans (individuals) has risen to 18 per cent in 2012 against 15 per cent in 2011. The total outstanding loans in the case of individuals aggregated Rs 11.69 lakh crore in 2012 against Rs 9.63 lakh crore in 2011.

17. Insurance policy will cost more from Jan 1: The Government has widened its service tax net to cover the policy premiums paid. Service tax rates will be 12.36 per cent on Unit-Linked Insurance Polices (only on charges, such as mortality and administration), 3.09 per cent on traditional products as most of the premium goes into savings, and 12.36 per cent on term plans.

18. SEBI proposes framework for infra trusts: To aid the financing and refinancing of long-term infrastructure projects in India, the capital market regulator SEBI has proposed a framework for the introduction of infrastructure investment trusts (InvIT). According to the 12th Five Year Plan, India requires an investment of Rs 65 lakh crore in infrastructure between 2012 and 2017. SEBI suggested that the trust could either be floated using the mutual fund structure or through a separate structural framework.

19. Consumer inflation linked bonds: Inflation

Indexed National Savings Securities - Cumulative, seek to protect savings from price rise, by offering returns over and above inflation at the retail level. Only retail investors can buy these bonds. The minimum investment size is Rs 5,000. The interest rate is the sum of the prevailing inflation based on the combined consumer price index (CPI) and a fixed rate of 1.5 per cent annually. The inflation rate will be reckoned with

a lag of three months, with the September CPI used in December, and so on. Interest on the bonds will not be paid out but compounded on a half-yearly basis.

20. SME varsity to come up in Hyderabad: A national Small and Medium Enterprises (SME) university will be soon set up at Hyderabad. Another technical training institute was also being set up in Visakhapatnam at an investment of over Rs 150 crore.

21. Sidharth Birla is new FICCI President: Sidharth Birla was elected as President, FICCI, after the industry chamber’s 86th Annual General Meeting.

22. Misuse of bank guarantees, letters of credit on the rise: Due to rising incidents of frauds, banks are not in favour of issuing non-fund based facilities, such as bank guarantees and letters of credit, to non-customers.

23. CCEA ups gas price for RIL subject to bank guarantee: The Cabinet Committee on Economic Affairs (CCEA) approved a Petroleum and Natural Gas Ministry proposal to allow RIL to sell KG-D6 block gas at the new price effective April 2014. It also decided against putting any cap/floor price on the gas rates and to maintain the gas price formula approved earlier. RIL can now get the benefit of the revised gas price in return for a bank guarantee for the unmet supply commitment from its KG-D6 block.

24. Cabinet approves Rs 6,600-cr interest-free loans for sugar mills: The Cabinet Committee on Economic Affairs has approved Rs 6,600 crore interest free loans to sugar mills to ease their cane payment burden. The CCEA also approved the exports of sugar without any quantitative restrictions.

25. Lok Sabha passes landmark Lokpal Bill: The Parliament on 18th Dec passed the Lokpal Bill, paving the way for the setting up of anti-corruption watchdogs at the Centre and State level. The Bill was passed by Lok Sabha on 18th Dec and by Rajya Sabha on 17th Dec. Highlights of the Bill include – (a) The Lokpal will consist of a chairperson and a maximum of eight members, of whom half will be judicial members; (b) Fifty per cent of the Lokpal members shall be SC/ST/OBCs, minorities and women; (c) The chairperson and members will be chosen by a selection committee consisting of the Prime Minister, Speaker of the Lok Sabha, Leader of the Opposition in the Lok Sabha, Chief Justice of India or a sitting Supreme Court judge nominated by the CJI, and an eminent jurist to be nominated by the President of India on the basis of recommendations of the first four members of the selection committee; (d) The jurisdiction will include all categories of


public servants and incorporate provisions for attachment and confiscation of property acquired by corrupt means, even while prosecution is pending; (e) Setting up of Lokayuktas through enactment of a law by the State Legislature within 365 days from the date of commencement of the Act.

26. Rename company secretaries as ‘governance

professionals’: The Company Secretaries Institute has written to the Corporate Affairs Ministry suggesting that their members may be rechristened as “governance professionals”.

27. Status quo on repo rate, CRR: RBI maintained status quo on the repo rate at 7.75 per cent and cash reserve ratio (CRR) at 4 per cent in its policy announced on 18th Dec. Explaining the rationale for not hiking the rate in the mid-quarter policy, RBI Governor stated that both retail and wholesale inflation have increased mainly on account of food prices and vegetable prices are likely to fall both at the wholesale and retail levels.

28. Tesco to invest $100 million in multi-brand retail stores: British retailer Tesco Plc became the first global retailer to seek the Government’s nod to enter multi-brand retail trade segment. Tesco plans to pick up a 50 per cent stake in Trent Hypermarket Ltd, a retail arm of the Tata group, and enter the multi-brand retailing arena. The stores will operate under the names Star Bazaar, Star Daily or Star Market, and the first few will come up in Maharashtra and Karnataka.

29. RBI plans carrot-and-stick approach to curtail bad loans: To spur banks/financial institutions to agree collectively and quickly to a plan of resolution of stressed assets, RBI may consider a liberal regulatory treatment including spreading the loss on sale of the asset over a period of two years; allowing takeout financing/refinancing over a longer period and not considering the same as restructuring. In case lenders cannot reach an agreement on resolution of stressed assets then they will be subject to accelerated provisioning. Before a loan account turns into a non-performing asset (NPA), banks should identify incipient stress in the account by creating a new sub-asset category — Special Mention Accounts (SMA) - a standard account, which is moving towards the substandard category. SMA will have three sub-categories — SMA-NF (classified on the basis of non-financial

signals); SMA-1 (when principal or interest payment is overdue between 31-60 days); and SMA-2 (when principal or interest payment is overdue between 61-90 days). The RBI also plans to set up a Central Repository of Information on Large Credits (CRILC) to collect, store, and disseminate credit data to lenders. Banks will have to furnish credit information to CRILC on all their borrowers having aggregate fund-based and non-fund-based exposure of Rs 5 crore and above. Systemically important non-banking finance companies (NBFC-SIs) will also be asked to furnish such information. In addition, banks will have to furnish details of all current accounts of their customers with outstanding balance (debit or credit) of Rs 1 crore and above. The reporting of an account as SMA-2 by one or more lending banks/NBFC-SIs will trigger the mandatory formation of a Joint Lenders’ Forum (JLF) and formulation of Corrective Action Plan (CAP). JLF formation would be made mandatory for distressed corporate borrowers with aggregate fund-based and non-fund based exposure of Rs 100 crore and above. The options under the CAP by the JLF would generally include: rectification (for regularising the loan account), restructuring and recovery (when the first two options fail).

30. Relief to banks on asset sales to ARCs: As per RBI, the excess provision on any bad loan which is sold to an asset reconstruction company (ARC) for a higher value can be reversed to the bank’s profits.

31. Inflation hits 14-month high: Surging food prices pushed November wholesale price index-based inflation to a 14-month high of 7.52 per cent. Food inflation shot up a huge 19.93 per cent — a near-four-year high. It had risen 18.19 per cent in October. Vegetable prices shot up an alarming 95.25 per cent in November compared with 78.38 per cent in the previous month.

32. India for food security subsidies out of WTO actionable sops ambit: India will push for complete exclusion of subsidies given under public stock holding programmes from the category of actionable subsidies at the World Trade Organisation. India has managed to get only an interim reprieve from legal action against such breaches at the recently concluded Ministerial Meeting in Bali.

33. Third home loan as a commercial real estate advance: The National Housing Bank has suggested to the Finance Ministry that home loans provided to a borrower for the third time should not be treated as commercial real estate advance. According to R. V. Verma, Chairman and Managing Director, NHB, such an approach


would help improve housing stock in the country and also give a fillip to the rental housing market. NHB is the housing finance regulator of the country.

34. SMS alerts: Banks prefer to charge a flat rate: Instead of linking the charges to the number of transaction alerts received by customers, banks are weighing the possibility of recovering Rs 5-10 a month from those opting to receive the alerts via SMS.

35. Centre to review RBI powers as part of financial sector reforms: The Financial Sector Legislative Reforms Commission (FSLRC) has proposed a financial regulatory mechanism comprising the RBI, Unified Financial Agency, Financial Sector Appellate Tribunal, Resolution Corp, Financial Redressal Agency, Public Debt Management Agency and the Financial Stability Development Council. Under the proposed regulatory structure, the RBI will perform the functions of monetary policy, regulation and supervision of banking and payment systems. The Financial Stability Development Council will function in the systemic risk and development category.

36. I-T dept stakes claim to Kingfisher assets: The Income Tax Department has said a consortium of banks cannot stake any claim to the assets of Kingfisher Airlines until the department’s dues of over Rs 350 crore are settled.

37. Govt offers more concessions under rural jobs scheme: Union Minister for Rural Development Jairam Ramesh has announced that – (a) every job card holder under MNREGA, will be entitled to Rs 10,000 to build an individual toilet. At present, a job card holder can avail Rs 4,500 to build a toilet; the Centre will provide assistance for the construction of buildings for women self-help federations; MNarega scheme will be converged with the Indira Awas Yojana and other housing schemes for the poor; (d) to allow the building of community storage facilities for agriculture produce in gram panchayats to link the MGNREGS with the Food Security Scheme; (e) if wages are delayed beyond 15 days, compensation at 0.05 per cent of wage per day of delay will be paid and this amount will be deducted from the salary of the responsible personnel.

38. Public sector banks may have to set up

insurance broking arms by February: At

present, banks are allowed to tie up with only one insurance company and sell products of only that insurer under the corporate agency (bancassurance) channel. According to Financial Services Secretary Rajiv Takru, all insurance products should be available through the one-lakh-plus bank branches. According to the guidelines finalised by the Insurance Regulatory and Development Authority, as brokers, banks will have to cap business from their own group companies at 25 per cent for life insurance and a similar cap for non-life insurance business. Most major public sector and private sector banks, such as State Bank of India, Union Bank of India, Bank of Baroda, Canara Bank, Bank of India, Punjab National Bank, Andhra Bank, ICICI Bank and IDBI Bank, have promoted insurance companies. Most banks are not in favour of broking as many of them had promoted insurance companies. Also, they will have fiduciary responsibility towards the customer while selling insurance products under the broking regulation.

39. ATM density still low in India: According to RBI data outlining global financial inclusion indicators for 2011, there are just 25.4 machines in every 1,000 sq. km in India. This translates into 8.9 ATMs for every one lakh population, one of the lowest densities in the world. Bank customers in China have access to 2,975 machines in the same geographical expanse, with 49.6 ATMs per one lakh population. In UK, ATM density stands at 261 per 1,000 sq km. But the number of ATMs per 1 lakh population is higher at 122.8 ATMs. ATM density in populous Malaysia stands at 34 per 1,000 sq km, with 56.4 machines per 1 lakh population. While the density in terms of machines per 1,000 sq km is lower in countries, such as Indonesia, Mexico and the Philippines, they have more machines per one lakh people owing to the lower population. However, in terms of bank branch density, India fares better than many developing countries. Bank branch density in India is 30.4 per 1,000 km, compared to just 9.6 in the US, 3.1 in South Africa and 7.9 in Brazil. China ranks highest in terms of bank branch density.

40. Funding for ‘specialised’ entities: RBI, in its discussion paper on resolution of NPAs, has stated that RBI will allow banks to extend finance to ‘specialised’ entities put together for acquisition of troubled companies. However, the lenders should ensure that these entities are adequately capitalized. The Reserve Bank will withdraw the minimum holding period for any initial loan sale. However, the bank purchasing


the NPA will have to hold the asset in its books for at least one year before selling the asset.

41. Curbs on firms roping in directors who are on boards of ‘wilful defaulters’: The provisioning in respect of existing loans/exposures of banks to companies having director/s, whose name/s appear more than once in the list of wilful defaulters, could be set higher at 5 per cent in case of standard accounts (against the usual provisioning of 0.40 per cent for standard accounts).

42. Coal Regulatory Authority Bill tabled: A Bill to

establish an independent regulatory authority for effective monitoring and regulation of the coal sector has been introduced in the Lok Sabha. The objective of the proposed coal regulatory authority include putting in place regulation that will be a counter to the practices and methods of a monopolistic producer of coal.

43. Banks may soon begin charging customers for ATM usage: To make good the expenses incurred on beefing up security, banks are considering levying a charge on all ATM transactions, be it a cash withdrawal or a balance enquiry. Currently, all transactions by customers at their bank’s ATMs are free. The first five transactions in a month at other ATMs are also free. According to initial estimates, the cost per transaction works out to Rs 6 on the basis of an average of 200 transactions in each of the 100,000-plus ATMs across the country.

44. Factory output falls, retail inflation rises:

Retail inflation surged to 11.24 per cent in November (10.17 per cent in October). Factory output contracted in October to 1.8 per cent, though this was partly because of the base effect — in October 2012, IIP growth was at a multi-month high of 8.2 per cent.

45. Govt plans education loans to minority communities for overseas study: Under Padho Pardesh (study abroad) scheme, interest subsidy will be given on education loans taken by meritorious students belonging to economically weaker sections of notified minority communities – Muslims, Christians, Sikhs, Buddhists and Zoroastrians (Parsis). The Padho

Pardesh scheme is being put together by the Ministry of Minority Affairs and the Finance Ministry to provide minority community students with better opportunities for higher education (Masters and Ph.D level) abroad and enhance their employability. Thirty per cent of the benefit under the scheme will be reserved for female candidates.

46. IOB gets RBI nod to open second branch in Bangkok: Indian Overseas Bank (IOB) has received RBI approval for opening a second branch in Bangkok. IOB is the only Indian lender to have a branch presence in Bangkok.

47. Export growth slows to 5.86% in November: Exports grew at a slower pace in November, at 5.86 per cent, from double-digit increases posted in the four preceding months. This was mainly due to a drop in shipments of gems and jewellery, petroleum products and pharmaceuticals. The trade deficit, however, shrank to $9.2 billion, easing pressure on the country’s current account deficit as imports posted a sharp decline of 16.37 per cent during the month. However, the Commerce Ministry is confident of reaching the export target of $335 billion for 2013-14.

48. SBI plans study on customer experience: In a bid to assess the current level of customer satisfaction and experience, State Bank of India is planning to conduct a study across key areas such as products, channels and processes. To be conducted across all 14 circles, the study will identify opportunities to improve customer experience across various areas and benchmark SBI’s processes and service against best-in-class banks in India and overseas.

49. Power tariffs may drop as norms for producers are tightened: Electricity rates may see a marginal drop if the draft regulations on power tariffs, issued by the Central Electricity Regulatory Commission (CERC), are approved. CERC reviews tariff regulations every five years. The existing regulations (2009-14) will expire on March 31.

50. Tata Hall opens at Harvard Business School: Tata Hall was funded by a $50-million gift donated by the philanthropic subsidiaries of Tata Group — the Sir Dorabji Tata Trust and the Tata Education and Development Trust.

51. Garment exports up 15% in April-Oct: Apparel exports have grown 15.5 per cent the first seven months of the fiscal to $8.2 billion due to revival of demand in the US and the EU.

52. More remittances directed towards investment purposes: As per a study by RBI, in 2012-13, the share of transactions with an average size of individual remittance of Rs 1 lakh and above was relatively higher at 45 per cent of


the total value of remittances against 27 per cent in 2009-10. The trends seem to suggest that over the years, a higher proportion of remittances are being directed towards investment purposes. About 57 per cent of the total remittance inflows are received in terms of dollar, while 16 per cent of remittances are received in Saudi riyal and UAE dirham. The share of Euro and pound sterling are 7 per cent and 8 per cent, respectively. According to the survey, SWIFT (Society for Worldwide Inter-bank Financial Telecommunication) is the costliest means of transferring funds.

53. RBI hits the jackpot with dollar deposit scheme: Banks have managed to mobilise $34 billion in foreign currency deposits since the special swap scheme was flagged off in September. This is much higher than the sums raised by the Resurgent India Bonds (RIBs) of 1998 ($4.2 billion) and the India Millennium Bonds ($5.5 billion).

54. MFI customers to be given credit scores: Equifax Credit Information Services, a credit information company, is offering scores to help understand the credit profile of microfinance customers. The product is called Equifax MFI Risk Score. Through this product, a microfinance institution that is a member of ECIS, can obtain credit reports of its customers.

55. Ministers’ panel okays Rs 7,200-crore soft loans for cash-strapped sugar mills:

56. A panel of senior Union ministers, which considered the demands of the sugar mills, has decided a soft loan of Rs 7,200 crore to settle the amounts due to sugarcane farmers. The loan will be given at 12 per cent interest rate to the sugar mills.

57. WTO adopts historic Bali package: The World

Trade Organisation (WTO) Ministers at Bali adopted the historic five-draft decision declaration and the 10-document full Bali Package that addresses the Doha Development Agenda. The draft proposes an interim mechanism for safeguarding minimum support prices to farmers against WTO caps till a permanent solution is found and adopted.

58. Defaults on commercial vehicle loans on the rise: According to India Ratings & Research report, the performance of commercial vehicle loans touched a new low in the third quarter (to September 30) of the ongoing calendar year. The

Fitch Group’s credit rating agency, in its quarterly analysis, found that “even creditworthy borrowers may not remain insulated in times of economic slowdown”.

59. House panel opposes bank licences to industrial houses: As per the Standing Committee on Finance, RBI should desist from giving new bank licences to industrial houses.

60. Rebound in FDI flows into India: In its World Investment and Political Risk Report, by World Bank, the foreign direct investment (FDI) flows received by India in the January-March 2013 period reflects a rebound in inflows. This is a result of the new investment policies put in place for select sectors, such as telecoms and insurance. India is by far the largest recipient of FDI in South Asia, comprising India, Pakistan, Sri Lanka and Bangladesh. The growth of FDI flows into developing economies has been dominated by Brazil, China, and India. In 2012, China received 10.5 times more FDI than India. While India received $24 billion, China received $253.5 billion.

61. Moody’s outlook turns bleak for India Inc: Moody’s Investors Service said its outlook for Indian corporates (non-financial) is negative, reflecting macro-economic challenges over the next 12 months. It also expects the rupee to remain volatile due to heightened expectations of a scale-back of quantitative easing by the US Federal Reserve in 2014. This could make the operating environment more challenging for importers and exporters.

62. SBI asks officers to meet loan-seekers only at branch: To ensure that the dealings of its officers are more transparent, State Bank of India has asked them not to meet the borrowers, existing as well as prospective, at any location other than the branch. An officer should hold meetings with the borrower only in the presence of other officers. One-on-one meetings and meetings at the residence of either the officer or the borrower should be avoided. Further, talks between the bank staff and the borrower, who may come for a loan/enhancement of loan limit/ one-time compromise settlement of a loan that has gone sour, should ideally be video recorded. The emphasis on transparency in officers’ dealings with borrowers comes in the wake of the Central Bureau of Investigation recently registering a case against SBI Deputy Managing Director Shyamal Acharya, Chairman of a New Delhi-based private company and others in an alleged bribery case.

63. Asset quality of banks will worsen by March 2014: According to a report by credit ratings agency ICRA, the asset quality of the banking


sector is set to worsen with gross non-performing assets (NPAs) ratio likely to end at 4.2-4.4 per cent by March-end 2014 from 4 per cent in September 2013. The absolute gross NPAs may deteriorate to Rs 2.70-2.90 lakh crore by March 2014 from 2.37-lakh crore in September this year.

64. Mulling automation to cut operational costs of ‘no frills’ accounts: The State Bank of India (SBI) is looking to develop an automated system that will help minimise the operational costs of “no frills” or zero balance savings accounts. These zero balance accounts, has led to higher operational costs but has not resulted in an improvement in the CASA (current and savings account) ratio.

65. Timely, accurate data not coming from banks, FIs: According to CIBIL chief, inadequate and poor quality data from financial institutions is a challenge for credit health assessing agency. CIBIL has four divisions or bureaus — retail, commercial, mortgage and frauds — through which it serves banks, other financial institutions and telecom companies. It will soon launch a ‘microfinance’ division, to offer credit information to microfinance institutions. The bureau currently has over 320 million records — from the retail bureau predominantly (305 million) and the commercial bureau (15 million).

66. Mahila Bank mulls childcare allowance for women staff: The Bharatiya Mahila Bank is planning to give childcare allowance to its women employees. The proposed move is aimed at attracting and retaining talent, especially women employees in the junior management grade (entry-level officer) and middle management grade (officers of the rank of manager and senior manager) in India’s first women’s bank in the public sector.

67. Create awareness among consumers: RBI has

advised credit information companies (CICs) to create awareness among consumers about credit behaviour and credit scores to manage their finances better. India stands at 28th rank amongst 189 countries on the ease of getting credit and has the best ranking amongst the BRICS economies — China is at 73, both Russia and Brazil are at rank 109.

68. Current account deficit narrows to 1.2% of GDP: With a pick up in merchandise exports and a dip in imports, the country’s current account deficit narrowed sharply to a more manageable 1.2 per cent of GDP in the second quarter. CAD — the excess of all goods, services and transfers imported in a period over the total exports — fell to $5.2 billion in the July-September quarter from $21 billion in the year-ago period. This was also lower than the CAD of 4.9 per cent of GDP in the previous quarter, ended June 30, 2013.

69. Core industries’ output declines 0.6% in Oct: After a robust 8 per cent rise in September, the eight core industries’ output contracted 0.6 per cent in October. The eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — had recorded a 7.8 per cent growth in output in October last year.


70. Odisha displaces Gujarat as India’s most attractive State for investment: The State accounts for over one-fifth of project proposals across the country in the first 10 months of the year, which were cumulatively valued at Rs 4.7 lakh crore, according to Department of Industrial Policy and Promotion (DIPP) data.

71. To ensure stability, RBI wants banks to build up capital buffer: In its draft report on implementation of counter-cyclical capital buffer (CCCB) regime in India, the RBI said it will endeavour to ensure that individual banks remain solvent through periods of stress. The regime also seeks to ensure that the banking sector has capital in hand to help maintain the flow of credit in the economy during economic downturns and periods of stress.

72. Mobile payments are gaining currency: Latest

data show there has been a 15-fold increase in immediate payment service (IMPS) amounts transferred using mobile phones between September 2012 and July 2013, as well as a seven-fold rise in the number of transactions. Seventeen million of the 870 million mobile phone users in India now access banking services through their mobile phones.

73. Systemically important banks should maintain higher tier 1 capital: According to draft framework by RBI, Domestic-Systemically

Important Banks (D-SIBs) will have to maintain additional common equity Tier 1 capital ranging from 0.20 per cent to 0.80 per cent of their risk-weighted assets. Common equity tier (CET) 1 capital includes common shares; share premium resulting from the issue of instruments, including CET 1; and retained earnings. The banks having a size of beyond 2 per cent of GDP will be selected in the sample of banks.

74. M. V. Tanksale is IBA’s new chief executive: M.V. Tanksale, former Chairman and Managing Director of Central Bank of India, has taken over as Chief Executive of the Indian Banks’ Association

75. RBI move permitting banks’ entry into insurance broking biz hailed: It will expand coverage and offer more choice to customers. As per RBI’s draft guidelines, banks will be permitted to undertake insurance broking business departmentally. For undertaking the business, a bank’s capital-to-risk weighted assets ratio (CRAR) should not be less than 10 per cent (as against the regulatory minimum of 9 per cent); and its net non-performing assets ratio should not be more than 3 per cent. Further, the bank should have made profits for the last three consecutive years; its net worth should not be less than Rs 500 crore; and the track record of the performance of the subsidiaries/ joint ventures, if any, should be satisfactory.

FEB 2013

1. Fiscal deficit hits 95% of estimate in 9 months:

According to data published by the Controller General of Account, the total deficit at the end of December touched Rs. 5.16-lakh crore, which is 95.2 per cent of the budget estimate of Rs. 5.42-lakh crore.

2. GDP growth in 2012-13 scaled down to decadal low of 4.5%: The downward revision has been prompted by lower than provisionally estimated agricultural and manufacturing output. The revised GDP growth of 4.5 per cent is a decadal low — the previous low of 4 per cent was recorded in 2002-03. The CSO has however raised GDP growth for 2011-12 to 6.7 per cent (second revised estimate) from 6.2 per cent. Economic growth for 2010-11 was lowered to 8.9 per cent (third revised estimate) from 9.3 per cent projected earlier. According to the first

revised estimate of national income for 2012-13, agricultural growth stood at 1.4 per cent (5 per cent in 2011-12), and mining declined 2.2 per cent (0.1 per cent growth in 2011-12).

3. Core industries output up 2.1%: The latest output of the eight core industries – coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity – was however lower than 7.5 per cent growth recorded in December 2012. In April-December 2013, eight core industries’ output grew a mere 2.5 per cent against 6.8 per cent in same period year. Coal output fell (-) 0.6 per cent in December year-on-year. Petroleum refinery production shrank by (-) 1.7 per cent.

4. Banks to rethink fee on ATM use: One of the six action points mooted at a recent annual Banking Ombudsmen conference related to fee on ATM use. In order to provide enhanced security at


ATMs, banks plan to cap the number of free ATM transactions to five a month, irrespective of whether customers use their own bank or another bank’s ATMs. RBI Deputy Governor KC Chakrabarty had said it would be unfair to charge customers transacting at their own bank’s ATMs. The practice of levying a penalty for non-maintenance of a minimum balance in ordinary savings bank accounts was also discussed at the conference. Henceforth, banks may consider converting such accounts into Basic Savings Bank Deposit accounts. The IBA may issue instructions to discontinue levying a pre-payment penalty on all floating-rate loans. Further, it has to ensure that fixed rate loans are truly fixed and not referenced to any floating rate benchmark. Banks and the IBA will also formulate a policy on zero liability of customers in electronic banking transactions, when a bank is unable to establish customer-level negligence. The onus of proving customer-level negligence would be on the bank and when such negligence is not established beyond doubt, the benefit of such doubt may be given to the customer.

5. Need for more specialised banks: According to Mr Nachiket Mor, Chairman of the RBI’s committee on financial inclusion, there is a need to have specialised banks compared to new full service banks. The idea of financial inclusion will be better served in the medium term if specialised banks like the payments only bank and lending only banks are allowed to flourish.

6. RBI working on early warning system for bad loans: The framework to revitalise distressed loans in the economy will be fully effective from April 1. The framework has been envisaged as there is a need to ensure that the banking system recognises financial distress early, takes prompt steps to resolve it, and ensures fair recovery for lenders and investors. The main proposals of the framework include early formation of a lenders’ committee with timelines to agree to a plan for resolution. Main proposals include – (a) Lenders will be given incentives to agree collectively and quickly work out a debt resolution plan; better regulatory treatment of stressed assets if a resolution plan is underway and accelerated provisioning if no agreement can be reached; (b) To improve the current restructuring process, the framework wants independent evaluation of large-value restructurings mandated, with a focus on viable plans and a fair sharing of losses (and future possible upsides) between the promoters and the creditors; (c) Borrowing could become more expensive if borrowers do not co-operate with lenders in resolution. Lenders will be given more liberal regulatory treatment for

asset sales; (d) Lenders can spread the loss on sale over two years provided the loss is fully disclosed. Further, take-out financing / refinancing will be possible over a longer period and will not be construed as restructuring; (e) leveraged buyouts allowed for specialised entities for acquisition of ‘stressed companies’. Sector-specific companies / private equity firms will be encouraged to play an active role in the stressed assets market.

7. FDI inflows into India in 2013 rose 17% to

$28 billion: According to the UN Conference on Trade and Development (Unctad) report for 2013, FDI during the year rose 11 per cent to $1.46 trillion which is the highest since the start of the global economic crisis in 2008. Unctad forecasts that FDI flows will rise gradually in 2014 and 2015, to $1.6 trillion and $1.8 trillion, respectively, indicating that the worst may be over for the crisis-ridden global economy in terms of foreign investment flows. Global FDI inflows in 2012 had shrunk 18 per cent to $1.31 trillion due to the weakening macroeconomic environment, slow growth in trade, GDP and employment. India attracted FDI worth $27.3 billion in 2012 which was 13.5 per cent lower than $31.5 billion worth of FDI attracted in 2011. Brazil, Russian Federation, India, China and South Africa, popularly known as the BRICS economies, accounted for 22 per cent of global FDI flows, which was nearly twice that of their pre-crisis level.

8. Trade deficit with China set to touch $40 b: According to data from Directorate-General of Foreign Trade, Indian exports to China touched $9 billion between April-November 2013, while imports totalled $34.5 billion.

9. IRDA officials meet RBI, bank chiefs to discuss concerns over insurance broking: The concerns relate to taking the broking route for selling insurance policies. Three major concerns of banks relate to their contracts with joint venture partners, equity arrangement and non-compete clause with insurance companies. The other major concern is the IRDA provision that banks will have to cap business from their own group companies at 25 per cent for life insurance with a similar cap on non-life insurance business too. Banks, as insurance brokers, will also have a fiduciary responsibility to the customer for the policies sold by them. However, banks can take a


professional indemnity policy to cover their liabilities. By selling products of multiple insurers, the customer will have more choice and will be able to choose the product best suited to his needs rather than the insurer’s product with whom the bank has a an exclusive tie up. Under the present system of distribution of insurance products through bank branches (bancassurance), banks act as corporate agents and sell the policies of only one life insurer, one non-life insurer and a standalone health insurer.

10. Currency notes issued before 2005 to be withdrawn: RBI has decided to withdraw banknotes printed prior to 2005. The rationale behind move to withdraw banknotes printed prior to 2005 is to remove them from the market as they have fewer security features compared to banknotes printed after 2005. The public can easily identify the notes to be withdrawn as the notes issued before 2005 do not have the year of printing on the reverse side. The recall of banknotes comes in the backdrop of rising cases of counterfeit currency and the role of black money in stoking inflation in the economy. According to RBI, it is standard international practice to withdraw old series notes. Between April 1 to June 30, 2014, banks will exchange these notes both for customers and non customers. From July 1, 2014, members of public can exchange any number of these old series notes from the bank branches where they have their accounts. However, to exchange more than 10 pieces of Rs 500 and Rs 1000 notes, non-customers will have to furnish proof of identity and residence to the bank branch in which she/he wants to exchange the notes. The notes printed prior to 2005 will continue to be legal tender.

11. Nanda Kumar is next NDDB chief: Nanda Kumar, currently Member of the National Disaster Management Authority, is slated to take over as Chairman of NDDB from March 1. Nanda Kumar will be the first ever person from the Indian Administrative Service to hold the position of NDDB Chairman.

12. NBFCs should form a single representative body: RBI has advised NBFCs to form a single representative body with the exception for microfinance where the RBI is keen on a self-regulatory organisation to cater to this segment’s needs. The RBI now regulates as many as 10 categories of NBFCs, including those engaged in asset financing, gold loans, micro-finance, credit information companies, factoring and residuary NBFCs. Currently, different segments of NBFCs have separate associations to pursue their interests.

13. Moody’s ups growth to 5.5% in 2014: The

report titled ‘India Outlook: Steady Growth, Lower Risk’ highlighted there is growing list of reasons to believe that the Indian economy has started to turn the corner, albeit slowly, after 30 months of sub-par growth. A pick-up in exports and normal monsoon besides the prospect of a better Government after the May election have boosted business sentiment and investor confidence. Both the World Bank and International Monetary Fund have said that the world economy is showing signs of bouncing back this year. While the World Bank has forecast global growth of 3.2 per cent, the IMF has now projected global growth to be higher at 3.7% in 2014. For 2015, IMF sees global growth at 3.9%.

14. 6% inflation target in 2 years will raise interest rates: The expert committee set up to revise and strengthen the monetary policy framework, headed by Urjit Patel has suggested that RBI will try to bring down inflation gradually from 10 per cent to 8 per cent over the next 12 months and to 6% over the next 24 months before formally adopting the recommended target of 4 per cent inflation with a band of +/-2 per cent around it. If the RBI accepts the recommendations of the Urjit Patel Committee, interest rates are unlikely to come down in 2014-15 even if the RBI removes its current restriction on bank borrowing through the repo window. The committee has also advocated that the real policy rate should be positive, implying that the repo rate (currently at 7.75 per cent) should be higher than the expected CPI inflation (expected to average around 8.5 per cent in 2014-15). The report is a step in the right direction as inflation leads to distortion of facts, such as savings behaviour, investment decisions and export competitiveness. Hence, bringing down inflation cannot be debated for growth.

15. All branches of IDBI Bank to offer export credit: These branches also support the export credit (both in foreign currency and rupees) requirements of exporters-customers of the 1,050 branches.

16. Panel to review commodity futures market liberalization: The Finance Ministry has set up a 5-member panel to examine whether the objectives of price discovery and risk management, which motivated liberalisation of the commodity futures market, have been


achieved or not. The panel may look at the merits of liberalisation of the commodities futures market even from the aspect of inflation management. India had till early 2000 banned trading in commodities futures. But progressively from 2002, all commodities were permitted for futures trading – purely as a hedging mechanism. But options contracts are still banned.

17. Banks can now lend up to 75% of value of

pledged gold: RBI has allowed banks to lend more against pledged gold jewellery, thereby creating a level-playing field for them vis-à-vis gold loan companies which can also lend up to 75 per cent of the value of pledged gold jewellery against the earlier 60 per cent. By allowing banks and NBFCs to lend more against the pledge of gold jewellery, the central bank may be trying to break the shackles of the unorganised sector in the business of lending against gold.

18. RBI committee to review governance of bank boards: The committee will review the regulatory compliance requirements of the board of directors of banks, judge what can be rationalised and where requirements need enhancements, examine the working of the boards, including whether adequate time is being devoted to issues of strategy, growth, governance and risk management. The committee will review central bank regulatory guidelines on bank

ownership, ownership concentration and representation on the board, analyse the representation to see whether the boards have the appropriate mix of capabilities and necessary independence to govern the institution, and investigate possible conflicts of interest in board representation, including among owner representatives and regulators. The Committee will also assess and review the ‘fit and proper’ criteria for all categories of directors of banks, including tenor of directorship, board compensation guidelines and any other issue relevant to the functioning of the boards and the governance they exercise. The Committee will be headed by P.J. Nayak, former Chairman and CEO of Axis Bank.

19. CBDT clarifies on TDS on service tax: Tax need

not be deducted at source on the service tax component on payments made/due to a resident payee. This will be allowed only in cases where the service tax component comprised in the amount payable to a resident is indicated separately in the contract between the payer and the payee. In such situation, tax has to be deducted on the amount paid/payable without including the service tax component.

20. India-EU free trade pact ‘likely by early 2015’: The European Union is India’s biggest trading partner.

21. Merchanting’ eligible for short-term credit: As per RBI, short-term credit either by way of suppliers’ credit or buyers’ credit will be available for intermediary trade transactions or merchanting. Merchanting or intermediary trade transaction involves purchase of goods by Indian residents from non-residents and then reselling them to another non-resident directly without the goods touching Indian ports. The merchanting transactions will include the discounting of export leg Letter of Credit by a bank authorised to deal in foreign exchange, as in the case of import transactions.

22. Dip in food prices eases inflation to 5-month low at 6.16% in December: Prices of food articles fell 6.4 per cent month-on-month, while primary articles were down 5 per cent.

23. CAD to be around $50 b: According to Finance Minister P. Chidambaram, the current account deficit (CAD) for 2013-14 should be around $50 billion, down from nearly $88 billion in the previous year.

24. Govt grants CBI more financial autonomy: The Centre has told the Supreme Court that the CBI’s Director will be given the rank of a Government Secretary with more financial autonomy. The CBI


Director could now approve projects worth Rs 15 crore in a year. The Director will be given a free hand to appoint consultants and employ people on contract in the investigating agency.

25. NCDEX launches gold contract for hedgers: The National Commodity Derivatives Exchange has launched gold-hedge contract which will mimic the international prices without considering other charges such as customs duty, local taxes and premiums. Excluding other charges will make the contract value lesser, compared with the conventional gold contracts, thus leading to lower margin requirement and in effect help to increase market participation.

26. RBI tightens norms to reduce banks’ exposure

to un-hedged foreign currency: RBI has decided to introduce incremental provisioning and capital requirements for banks’ exposures to entities with unhedged foreign currency exposures from April 1, 2014. Unhedged foreign currency exposures (UFCEs) of corporates are an area of concern not only for individual corporates but also for the entire financial system.

27. Employees’ Provident Fund to fetch 8.75%: Central Board of Trustees (CBT) of the Employees Provident Fund Organisation (EPFO) have recommended to the Government 8.75 per cent rate of interest for 2013-14 to its subscribers as against 8.5% last year.

28. Aadhaar enrolment to cover 60 crore citizens soon: The Unique Identification Authority of India (UIDAI) has said that it would complete issuing 60 crore Aadhaar numbers in the next three-four months, from 55 crore at present.

29. Rough ride ahead for insurance Web portals: Web aggregators, that is, Web sites that compile and provide information on policies of various insurers, will have to face tighter regulatory norms. The new regulations rolled out by the Insurance Regulatory and Development Authority do not allow these aggregators to display information pertaining to other product categories, such as loans, deposits and mutual funds (which are revenue-generators at present), or display advertisements or tie-ups with social-media sites. In a bid to ensure that they display only factual information, the regulator has disallowed Web portals from showing ratings, rankings, endorsements or listing of bestsellers. The IRDA has also introduced a foreign direct

investment limit at 26 per cent for ownership of Web aggregators.

30. SBI to outsource operations of some ATMs: The State Bank of India (SBI) has plans to outsource the management of some of its ATMs. It has called for a Request for Proposal (RFP) from vendors to manage about 7,843 cash dispensers (ATMs). SBI had 32,777 ATMs as at end-September 2013. It has expanded its network steadily in the past few years, adding about a third of its network (about 11,000 ATMs) in the past 18 months.

31. Piped gas, CNG likely to cost more from April: The prices of piped cooking gas, transportation fuel CNG, and electricity generated from gas could go up, as the Government is set to announce the new price for domestically produced gas in March. The Government on January 10 had notified the new gas pricing policy that would be applicable to all domestically produced natural gas from April 1 for the next five years. The price could range between $7 and $8 a unit which would almost be double the current rates. Every dollar increase in natural gas price results in a hike of about Rs 2.60 a unit for piped natural gas, Rs 3 a unit for CNG, and 50 paise a unit increase for electricity at the retail end. Piped natural gas is measured in standard cubic metre and CNG in kg.

32. NELP X will offer uniform licence for all resources: Lifting all restrictions, the Ministry of Petroleum & Natural Gas, in the 10th edition of the oil and gas blocks auction, has proposed to allow explorers to hunt for all kinds of resources — oil, gas, coal bed methane, or shale. Till now the country has been offering exploration blocks under specific policies: New Exploration Licensing Policy (NELP) for oil and gas, and CBM Policy for coal bed methane.

33. Bank staff can claim benefits even on removal from service: The Supreme Court has ruled that a bank employee can claim pension and encashment of leave even when removed from service. The case pertained to the denial of the claims of late S.K. Kool who was removed from service ‘as a measure of punishment’ by Bank of Baroda.

34. Work on DTC, GST completed: As per Parthasarathi Shome, Adviser to the Union Finance Minister, the Union Finance Ministry has completed the nitty-gritty on both the Direct Taxes Code (DTC) and the Goods and Services Tax (GST). For GST to be implemented, further clearance from the States is also required.

35. Dec export growth slows to 3.5%: India’s exports grew at a sluggish 3.5 per cent to $26.34 billion in December 2013 compared to the


corresponding year-ago period. Despite the low export growth, the trade deficit stayed on leash dropping to $62.77 billion in December 2013 compared with $96.14 billion in December 2012. This was largely because of the continued fall in gold and silver imports, which declined by 68.3 per cent to $1.7 billion after various restrictions were put in place. Overall, imports during the month declined by 15.25 per cent to $36.48 billion.

36. Govt notifies new gas price mechanism: The Government has notified the new gas pricing policy that would be applicable to all domestically produced natural gas from April 1 for the next five years. However, Reliance Industries and its foreign partners BP and Niko Resources in the KG-D6 block would have to submit a bank guarantee before they can avail themselves of the new price. The new gas pricing mechanism, as suggested by a panel headed by Prime Minister’s Economic Advisory Council Chief C. Rangarajan, has been approved by the Cabinet Committee on Economic Affairs (CCEA).

37. Bank accounts for all can be achieved through Aadhaar: According to Nachiket Mor, Chairman of the RBI-appointed financial inclusion committee, bank accounts for all can be achieved in two years if banks can ride on the Aadhaar enrolment drive that is currently underway. The Mor committee, has proposed that banks should provide every individual over 18 years a bank account by January 2016. In India, only 36 per cent adults have bank accounts.

38. LIC launches new Jeevan Anand plan: LIC has re-launched its “Jeevan Anand” plan, a participating non-linked plan which offers an attractive combination of protection and savings. This product provides financial protection against death throughout the lifetime of the policyholder with a special feature wherein it offers cover for whole life even after payment of maturity amount.

39. Pre-paid instrument providers can be turned into banks: According to Nachiket Mor, Chairman of the RBI-appointed financial inclusion committee, payment banks can be created by converting the existing pre-paid instrument (PPI) providers into banks. The committee had recommended setting up of specialised payment banks to provide payment services and deposit products to small businesses and low-income households. There are 27 such PPIs in the country.

40. To protect lenders, mortgage registry to cover more assets: Banks and lending institutions may soon be required to file with a central registry all information on loans sanctioned for gold

jewellery, plant and machinery, corporate brands and logos. A legal working group set up by CERSAI and International Finance Corporation, under the chairmanship of M. R. Umarji, Chief Legal Advisor, Indian Banks’ Association, has recommended that the scope of CERSAI be expanded to cover movable assets, tangibles and intangibles. CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India), a state-owned entity, currently operates a central registry with which information on all equitable mortgages is filed by lending institutions. This legal working group has also recommended to the Finance Ministry that the scope of CERSAI be expanded to cover all kinds of mortgage transactions. CERSAI was established with the main objective of protecting the lenders against frauds/misrepresentations and preventing multiple financing against the same asset (immovable property in the current scenario).

41. Govt confident of meeting export target of $325 billion: The Commerce Ministry is confident of meeting the export target of $325 billion this fiscal with most sectors, except some such as pharmaceuticals and gems & jewellery, doing well.

42. Crisil sees loss of 14 million jobs in non-farm sector over next 6 years: About 12 million people will return to work in farms or related activities in the period between FY 2013-19 as non-farm jobs will likely vanish in thin air due to slow economic growth and policy paralysis, according to ratings agency Crisil. If the projections come true, this will mark the reversal of a trend seen in the previous seven-year period between FY 2005-12 that saw a loss of 37 million farm-related jobs.

43. Offshore wind energy agency on cards: The

Ministry of New and Renewable Energy (MNRE) is making efforts to set up a National Offshore Wind Energy Agency to explore wind generation potential in the offshore areas.

44. Govt to clearly define direct sellers for FDI: The Government is working on a clear definition for multi-layer marketing and direct selling in the foreign direct investment (FDI) policy to remove ambiguities on the legal status of foreign companies operating in the sector. The direct selling industry in India is valued at Rs 7,000 crore and is growing at over 10 per cent per


annum. In multi-layered direct selling, the company distributors sponsor new sellers who, in turn, bring in more suppliers. Sales credits are earned on the basis of products sold by the main distributors and their sponsored vendors. Since the FDI policy is silent on multi-layered marketing and direct selling, such companies run the risk of being clubbed with fraudulent ponzi and pyramid schemes and getting penalised under the Prize Chit and Money Circulation Act, 1978.

45. Aditya Birla group is top corporate donor to Cong, BJP: According to Association of Democratic Reforms (ADR), business houses were the biggest donors to political parties, accounting for 87 per cent of their total contribution from known sources. Over the last eight years, business houses donated Rs 379 crore to political parties. The donations were made by companies across sectors, including manufacturing, power, oil, mining and real estate.

46. Soon, bank customers will get live video assistance: Some banks like Union Bank of India, Bank of Baroda, Andhra Bank are preparing to introduce interactive televisions which will guide customers and help resolve their issues. These will be connected live to a central studio, where bank personnel will be available round-the-clock to interact with customers.

47. SEBI notifies norms for portfolio investors: The Foreign Portfolio Investor (FPI) Regulations formed on the recommendations of the K.M. Chandrasekhar Committee on rationalising investment routes and monitoring foreign portfolio investments has been notified. The regulations merge foreign institutional investors, sub-accounts and qualified foreign investors into a single investor class called FPI. SEBI has decided to do away with prior direct registration of FIIs and sub-accounts. This would be done by designated depository participants authorised by the regulator and would be subject to know-your-client compliance. FPIs have been divided into three categories. They would receive the same tax treatment as FIIs. FIIs and QFIs that are already registered would be deemed to be FPIs until their registration expires. FIIs are allowed to buy and sell securities on payment of conversion fees till either the their FII/sub account registration expires or a certificate of registration as FPI is obtained. However, QFIs have been given one year to re-register as FPIs.

48. 100% FDI in pharma stays: India will continue to allow 100 per cent Foreign Direct Investment (FDI) in existing pharmaceutical companies. Domestic companies selling their facilities or operations to foreign players, however, will not

be barred from starting a fresh venture in the same area as the “non-compete” clause will not apply in deals except in special cases. The DIPP had sought reduction of FDI limit for brownfield pharma projects from 100 per cent to 49 per cent in “critical’’ areas as it feared that acquisition of Indian companies could vitally affect availability and affordability of generic (off-patent) medicines.

49. IRDA chief bats for single product for all insurance needs: According to T.S. Vijayan, Chairman, Insurance Regulatory and Development Authority, a single product covering all basic needs of insurance will help increase the reach of insurance.

50. Health cover, pension plans to drive growth in insurance sector: According to an Assocham-Ernst and Young Report, Health insurance and pension plans will drive growth in the Indian insurance industry. However, the distribution and claim management would continue to be major challenges.

51. Court order puts spoke in banks’ loan recovery process in non-metros: As per Section 14 of the Sarfaesi Act, where the possession of any secured assets is required to be taken by the secured creditor the secured creditor may, for the purpose of taking possession or control of any such secured asset, request, in writing, the Chief Metropolitan Magistrate or the District Magistrate within whose jurisdiction any such secured asset or other documents relating thereto may be situated or found, to take possession thereof. ,The Madurai Bench of the Madras High Court observed that secured creditors in metropolitan areas could approach either the Chief Metropolitan Magistrate or District Magistrate but cannot approach Chief Judicial Magistrate for relief under the SARFAESI Act.

52. RBI hikes NBFCs’ gold loan limit to 75% of value: NBFCs can now give up to 75 per cent, up from 60 per cent, of the value of the gold jewellery pledged as loan. In March 2012, the RBI had directed NBFCs not to give more than 60 per cent of the value of gold jewellery pledged in view of the rapid pace of their business growth and the nature of their business model, which has inherent concentration risk and is exposed to adverse movement of gold prices.

53. DIPP seeks stakeholders’ views on FDI in e-commerce: The existing policy does not allow FDI in business-to-consumer (B2C) e-commerce activities. But 100 per cent FDI is allowed in business-to-business (B2B) e-commerce and in the market place model under which the e-


retailer does not sell directly to consumers but provides a platform to other sellers.

54. Every adult should have bank account by Jan 2016: According to RBI appointed Nachiket Mor Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households, every resident should be issued a Universal Electronic Bank Account automatically at the time of receiving their Aadhaar number by a high quality, national, full-service bank. An instruction to open the bank account should be initiated by the Unique Identification Authority of India upon the issuance of an Aadhaar number to an individual over the age of 18. By January 1, 2016, the number and distribution of electronic payment access points would be such that every resident would be within a 15- minute walking distance from such a point anywhere in the country.

55. Create one agency to redress all customer complaints: The Committee on Financial Services has suggested that a unified Financial Redress Agency (FRA) across all financial products and services should be created by the Ministry of Finance to solve consumer complaints within 30 days. The FRA, which will in turn coordinate with the respective regulator, should have a presence in every district in the country and customers should be able to register complaints over the phone, using text messages, internet, and with the financial services provider directly. The provider should then forward the complaint to the redressal agency and customers should have their complaints resolved within 30 days of registration of the complaint with the FRA.

56. Specialised banks for low-income households: The RBI-appointed committee on financial inclusion has recommended that the central bank should set up specialised banks called Payments Bank to provide payment services and deposit products to small businesses and low-income households. Since the new bank will be dealing with poor customers, such a bank must be allowed to accept a maximum deposit of not more than Rs 50,000. Such a bank will earn from the payment services it offers, such as money transfers and online payments, as well as by deploying the deposits in secure government securities (G-secs). In order to protect the money of the poor customer, such a bank will not be allowed to lend in the market.

57. Priority lending targets may be revised based

on sectors, districts: To enable greater regional and sectoral specialisation among banks, RBI may revise the priority sector lending (PSL) targets and require banks to meet an adjusted PSL target of 50 per cent against the current requirement of 40 per cent.

58. Set up State finance regulatory panel: The Committee on Comprehensive Financial Services for Small Businesses and Low-Income Households has suggested that a State Finance Regulatory Commission (SFRC) could be created into which all the existing State Government-level regulators could be merged. Functions such as the regulation of non-government organisations, microfinance institutions and local money services business could be added on to the SFRC.

59. Bank design — horizontal & vertical: The committee on financial inclusion has come up with two broad designs for the banking system in the country — the Horizontally Differentiated Banking System (HDBS) and the Vertically Differentiated Banking System (VDBS). In HDBS design while all configurations are deposit-taking, the variations between them are on account of: (i) the ways in which they originate risks and transmit them throughout the system; and (ii) their size and focus — whether regional


or sectoral. The HDBS has six design categories — national bank with branches; national bank with agents; regional bank; national — consumer bank; national-wholesale bank; and national- infrastructure bank. The rational for VDBS is usually linked to niche capabilities such as credit under-writing for specialised business segments or network management in the case of payments. The HDBS has five design categories — payments network operator; payments bank; full-service bank; wholesale consumer bank; and wholesale investment bank.

60. CAG can audit private telcos: The Delhi High

Court has ruled that the Comptroller and Auditor General can audit revenues of private companies if they have an impact on Government’s income.

61. Services PMI down for sixth consecutive month: The HSBC PMI Index shrank to 46.7 in December from 47.2 in November. A reading above 50 indicates growth while anything below 50 denotes a contraction.

62. FinMin to re-examine capital controls, foreign portfolio investment norms: The Ministry has extended the term of the Sahoo Committee, which recently submitted its recommendations on depository receipts. In the second phase, the nine-member panel — headed by M. S. Sahoo, has been asked to review the framework on external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs). Besides reviewing the framework of direct listing of Indian companies abroad, the panel will look at dual listing of corporates.

63. Banks approach RBI to hike ATM transaction fee: Banks have mooted the charge on ATM transactions to pay for the increased security costs at ATMs, put in place by many State Governments, following the grievous attack on a woman inside an ATM kiosk in Bangalore last November. Currently, there is no cap on the number of transactions that a customer can undertake at his own bank’s ATM. Given that the country has about 1.40 lakh ATMs at present, banks will roughly see an outgo of about Rs 560 crore a month on account of providing security alone.

64. Company Law Tribunal: The Corporate Affairs Ministry has invited applications for filling up two posts of technical member in the National Company Law Appellate Tribunal (NCLAT). Under the new company law, NCLAT will hear

appeals against the orders of the National Company Law Tribunal, an overarching body being set up for implementation of company law in India.

65. Early warning system to help SBI zero in on stressed loans: Faced with a pile of bad loans, State Bank of India plans to set up an early-warning system to identify signs of stress in such loans so that it can act immediately to resolve them. The move comes in the wake of the bank’s gross non-performing assets increasing by about 40 per cent to Rs 64,206 crore at the end of September 2013 against Rs 49,202 crore at the end of September 2012.

66. SEBI names 3 qualified clearing houses for securities market: The capital market regulator SEBI has said that National Securities Clearing Corporation Ltd (NSCCL), Indian Clearing Corporation Ltd (ICCL) and MCX-SX Clearing Corporation Ltd (MCX-SXCCL) are the only qualified central counterparties (QCCPs) in the Indian securities market. Clearing Corporations are designated as Market Infrastructure Institutions for oversight considering its systemic importance in securities markets regulated by the SEBI. They are also subject to rules and regulations that are based on International Organisation of Securities Commissions’ (IOSCO) Principles for Financial Market Infrastructures (PFMIs). These principles were issued by IOSCO in April 2012 to enhance the safety and efficiency in payment, clearing, etc.

67. Despite legal challenges, Govt moves ahead

on Company Law Tribunal: The Government is moving ahead with the formation of the National Company Law Tribunal (NCLT), an overarching body being set up for implementing most provisions of the new company law, even as the outcome of a petition filed before the Supreme Court by the Madras Bar Association is awaited.

68. RBI panel enlists 2 administrators for setting financial benchmarks: According to an RBI committee, the Fixed Income Money Market and Derivatives Association of India (FIMMDA) and the Foreign Exchange Dealers Association of India (FEDAI) may be designated as administrators for all rupee interest rate and foreign exchange benchmarks, respectively. FIMMDA is a voluntary market body for the bond, money and derivatives markets. FEDAI is a self-regulatory body, whose major activities include


framing of rules governing the conduct of inter-bank foreign exchange business and liaison with the RBI for reforms and development of the forex market. Financial benchmarks are primarily used for pricing, valuation and settlement purposes in financial contracts.

69. To boost supply, Govt relaxes norms for mega power projects: The Government has decided to ease the Mega Power Policy in a move that will help nearly 25 projects with investments of more than Rs 1.6 lakh crore. This is expected to increase power availability in the country and also ensure that consumers are charged reasonably for electricity supply. The amendment allows project developers to tie up for only 65 per cent of generation capacity through competitive bidding with the State distribution utilities against the earlier norm of 85 per cent. The amendment allows the developer to sell up to 35 per cent of installed/net capacity under regulated tariff as per the specific host State policy.

70. In FY13, export markets remain almost same: According to statistics put out by RBI, the destination of India’s exports during the first half of the current fiscal remained broadly the same as the previous year. India exported goods worth $300 billion in fiscal 2013. In the first six months of the current fiscal, exports have nearly touched $152 billion. About a third of the exports goes to OECD countries, which include the European Union, North America (US/Canada), Australia and Japan. About a fifth of the exports goes to OPEC countries (Indonesia, Iran, Iraq, Kuwait, the UAE and Saudi Arabia). Forty-three per cent of the exports were sent to ‘other developing’ countries (such as those in the SAARC region, other parts of Asia and Africa) in the first six months ending September 2013.

71. Inflation, job creation are the challenges for Govt: According to PM, there are three main challenges on economic front – creating jobs in the manufacturing sector, controlling the persistent inflation, and curbing corruption.

72. Cabinet nod for conversion of pref shares into equity in 3 banks: The Union Cabinet has given its nod for conversion of perpetual non-cumulative preference shares held by the Government in three public sector banks — Indian Bank, UCO Bank and Vijaya Bank — into equity shares. PNCPS amounting to Rs 400 crore, Rs 1,823 crore and Rs 1,200 crore in Indian Bank, UCO Bank and Vijaya Bank, respectively, will be converted into equity in favour of Central Government.

73. Government cancels Rs 3,500-cr chopper deal with AgustaWestland: The Government has

scrapped the controversial Rs 3,500-crore deal to purchase 12 helicopters from AgustaWestland. The deal was cancelled following allegations of unethical dealings by Italian company Finmeccanica in the sale by its Anglo-Italian subsidiary AgustaWestland to the Ministry of Defence. It is alleged that kickbacks were paid to win the contract.

74. RBI seeks taxman’s feedback on bank licence

aspirants: RBI has asked the income-tax authorities information on six issues related to tax compliance of the 25 groups that have applied for starting a bank. The issues include whether the groups were subjected to any search and seizure/survey in the past five years; whether any penalty was imposed for concealment of particulars/furnishing inadequate particulars of income; whether the entities are facing any prosecution proceedings under the Income-Tax Act and/or whether they were convicted for any offence under the Act; whether the entities have filed their returns up-to-date; whether any tax dues are outstanding; and whether the entities are complying with the provisions relating to deduction of tax at source.

75. Service tax on insurance takes effect: From 1st January 2014, the services related to insurance like third-party administrators (TPAs), brokers, agents, insurance repositories, Web aggregators, referral entities and surveyors will be subject to service tax.

76. Farm, industrial sectors account for most of the bad loans: As per RBI’s Financial Stability Report, gross non-performing assets (NPAs) are likely to go up to 4.6 per cent of total loans by September 2014 from 4.24 per cent this September — from Rs 1.67-lakh crore to Rs 2.29-lakh crore. In terms of gross NPAs, agriculture has the highest ratio at 5.5 per cent at end-September 2013. The sector is followed by industries at 4.9 per cent. Share of retail loans in gross NPAs stood at 2.2 per cent, while restructured standard advances to total advances were 0.3 per cent at end-September. Public sector banks have the lowest share of the retail segment in their loans portfolio — around 16%.

77. Cabinet okays setting of 58 medical colleges: The Cabinet Committee on Economic Affairs (CCEA) has approved the establishment of 58 new medical colleges which will be attached with the existing district or referral hospitals.


MAR 2014

1. India, Dubai reach air services pact, to increase seats by 11,000: The increase in the seats is to be in three phases, extending up to March 2015.

2. DK Saraff to head ONGC: DK Saraff, MD of ONGC Videsh, will take over as the new Chairman from March 1. He will hold the post till September 2017.

3. IRDA eases norms to reduce agent attrition:

The Insurance Regulatory and Development Authority (IRDA) has decided to remove minimum persistency criteria (the minimum number of policies sold by agents that have to be renewed), leaving it to the board of each life insurer to have their own norms on persistency. In 2011, the IRDA had put in place a minimum persistency rate of at least 50 per cent. Last year the IRDA had also waived off the condition of fresh training for agents whose licences had lapsed. Further, in a bid to attract more agents into the life insurance industry, the regulator reduced the cut-off percentage in the pre-recruitment examination from 50 per cent to 35 per cent.

4. Tiny deposit collectors get a minimum wage hike: The Tribunal has ruled that on a monthly collection of Rs. 3 lakh, a deposit collector should get fallback wages of Rs. 8,000 and conveyance of Rs. 750 a month. On a monthly collection of over Rs. 3 lakh and up to Rs. 5 lakh, a deposit collector will earn an incentive of 3 per cent. For a monthly collection of over Rs. 5 lakh, a deposit collector will earn an incentive of 2 per cent. The award will be applicable retrospectively from July 19, 2005, the date when the banks were summoned to appear before the Tribunal. Currently, a deposit collector / agent gets fallback wages of Rs. 750 on a collection of Rs. 7,500 per month. For collections above Rs. 7,500/month, they get an incentive of 2 per cent of the amount collected. In case a deposit collector mops up Rs. 3 lakh per month, he can take home only Rs. 6,600 ( Rs. 750 as fallback wages plus Rs. 5,850 as incentive remuneration).

5. Axis Bank rolls out e-KYC account opening service: The customer can approach the bank’s business correspondents, who will access the MicroATM (a biometric handheld device) to open an Aadhaar-based account through e-KYC (know-your-customer). For the Aadhaar-based e-KYC mode of account opening, Axis Bank has tied up with the National Payments Corporation of India and the Unique Identification Authority of India.

6. Third party motor insurance rates likely to be market driven by year-end: The rates are likely to go up from April this year, consequent to an IRDA proposal for rate hikes of between 25 per cent and 137 per cent. Currently, third party motor insurance is the only segment where premium rates are fixed by the insurance regulator. Third party liability premium rates have been going up for the last two years.

7. Lending rate for fresh loans rise faster than for existing ones: According to RBI’s quarterly data on WALR, the weighted average lending rate (WALR) for fresh loans rose 57 basis points from 11.46 per cent (in the April-June period) to 12.03 per cent (in the July-September period). The WALR for existing loans nudged up 11 basis points from 12.20 per cent to 12.31 per cent.

8. Rs. 3,000-cr PF deposits lying unclaimed: As per the CAG report, 8.53 per cent of the total of 8.55-crore accounts were inoperative as on March 2012. The number of such accounts zoomed to over 73 lakh in 2011-12 from over 25 lakh in 2006-07.


9. United Bank of India chief quits as bad-loan crisis boils over: Archana Bhargava, CMD of United Bank of India (UBI), opted for voluntary retirement with effect from February 20. Bhargava’s resignation comes in the wake of a surge in bad loans at UBI, leading to a loss of around Rs. 1,200 crore in the third quarter. UBI’s gross non-performing assets (NPAs) jumped to Rs. 8,546 crore in the October-December quarter (including a fresh slippage of Rs. 3,172 crore). As of December 31, 2013, UBI’s gross NPAs stood at 10.82 per cent of total advances, one of the highest among Indian banks.

10. I-T Dept shoots letters to 50,000 non-filers:

The Finance Ministry has stated that it has identified 21.75 lakh people for not filing income tax returns and letters have been sent to 50,000 individuals. The Income-Tax Department identified these non filers on the basis of a business intelligence project. This identifies Permanent Account Number (PAN) holders who have not filed income tax returns and about whom specific information is available in Annual Information Return (AIR), Central Information Branch (CIB) data and TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) returns.

11. Fertiliser subsidy may touch Rs. 90,000 cr in 2014-15: Fertiliser subsidy is estimated to rise to Rs. 90,000 crore for the 2014-15 fiscal. This is 30 per cent more than the estimate made in the interim budget. The estimate is based on the carry-over from the current fiscal and new demand for subsidy.

12. Banks as brokers: Life Insurance Council has no firm view: The Life Insurance Council is an apex industry/consultative body representing 24 life insurers in the country. The Ministry of Finance has asked public sector banks to take up compulsory insurance brokerage from January 15, 2014, which has however, been kept in abeyance. As a corporate agent, a bank is allowed to sell products of a single life insurance company. But as a broker, it can sell multiple policies of different insurers.

13. RBI panel to examine recommendations on financial sector reforms: RBI has decided to constitute a committee to examine the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) relating to capacity building in the banking sector. It will examine if the members on bank

boards need to be certified — by way of say, an appropriately designed course which could be made mandatory for every individual before appointment to the board of a bank. The committee, which is headed by G Gopalakrishna, Executive Director, Reserve Bank of India, has been tasked with the responsibility of identifying capacity building requirements keeping in view the role of financial sector and what it should deliver.

14. Weakening bank balance-sheets is a worry: The International Monetary Fund (IMF) has cautioned Indian authorities to “closely monitor” the deteriorating corporate financial position and weakening bank balance sheets of banks, especially public sector banks. There is need to strengthen prudential regulations of banks’ asset quality classification and concentration risks.

15. State Bank of India to go slow on hiring: The country’s largest lender, which used to hire 30,000-35,000 employees annually till a few years ago, has slowed down fresh recruitments since last year amid rising staff expenses and other concerns.

16. Indian banks abroad see credit growth rise 31.7%: According to Reserve Bank of India’s survey on international trade in banking services, Indian banks operating overseas witnessed higher credit growth compared to their foreign counterparts operating in India. According to the survey for 2012-13, growth of credit extended by Indian banks’ branches operating abroad increased by 31.7 per cent to Rs. 5,85,570 crore ($ 107.7 billion). Credit extended by foreign banks operating in India increased 27.5 per cent to Rs. 3,07,700 crore billion ($56.6 billion) during 2012-13. Deposits mobilised by Indian bank branches operating abroad increased 45.5 per cent to Rs. 3,93,070 crore ($72.3 billion) during 2012-13. In case of foreign banks operating in India, deposit growth moderated to 3.2 per cent at Rs. 2,83,510 crore.

17. Govt to take back coal blocks allotted to 50 companies: According to the Government, blocks that were not able to achieve the requisite milestones have been de-allocated.

18. Parliament passes Telangana Bill: Both Lok Sabha and Rajya Sabha have passed Andhra Pradesh Reorganisation Bill, 2014, to create a separate Telangana State.

19. Rice exempted from service tax: Rice was originally exempted from service tax as it was classified as agriculture produce. However, the Finance Ministry later said that only paddy was agriculture produce, while rice was a processed item. By virtue of the definition of ‘agricultural produce’ in Finance Act 2012, read with the


Negative List, storage or warehousing of paddy was excluded from the levy of service tax. Rice was not. Budget 2014-15 has proposed to exempt loading, unloading, packing, storage and warehousing of rice from service tax.

20. Banks can continue as agents of insurers: Insurance Regulatory and Development Authority (IRDA) is renewing the corporate agency licences of banks having tie-ups with insurers. At present, banks have a corporate agency arrangement with insurance companies to sell insurance products. Under this arrangement, they are allowed to sell products exclusively of one life insurer, one non-life insurer and a standalone health insurer. IRDA has not yet set a deadline on when banks should become insurance brokers. In December, the Finance Ministry issued a notification asking banks to become insurance brokers, whereby they will sell policies of multiple insurers. This move is aimed at creating a level-playing field for non-bank promoted insurance companies vis-à-vis bank-promoted insurance companies. Major public sector and private sector bankshave promoted insurance companies. Most of these banks are not keen to become insurance brokers as they have contractual obligations with joint venture partners of insurance companies.

21. Inflation tumbles to 8-month low of 5.05% in Jan: Led by softening food prices, inflation as measured by the Wholesale Price Index (WPI) cooled to an eight-month low of 5.05 per cent in January. The WPI inflation in January is the lowest since May 2013 and significantly lower than the 7.31 per cent figure in January 2013. This moderation comes on the heels of Consumer Price Index (CPI) inflation hitting a two-year low of 8.79 per cent in January. There was, however, no respite on the core inflation front, with the rate inching up to 3 per cent in January from 2.8 per cent in December 2013.

22. SBI tweaks recovery model: With bad loans surging 27 per cent year-on-year to touch Rs. 67,799 crore towards the end of December, State Bank of India has got into a ‘non-performing asset control’ mode, tweaking its recovery model and setting up committees to check further slippages.

23. Govt rakes in Rs. 61,162 cr in spectrum sale: The spectrum auction, which ended after 10 days of intense bidding, has thrown up Vodafone, Airtel and Reliance Jio as clear winners giving these operators spectrum that can be used for high-end data services using 3G and 4G technologies.

24. Regulator sets seven-board cap for independent directors: In a move to promote

good business practices, the SEBI board has approved new corporate governance norms that restrict the number of independent directors on a company board, spell out whistleblower policies, and institute checks on salaries of key managerial persons, among other things. The board has now revised its listing agreement, bringing it in line with the requirement of the provisions of the Companies Act, 2013. The new norms will come into effect from October 1. Under the new rules, an individual can serve as an independent director on a maximum of seven listed companies. The Board also decided that if an individual is a whole-time director in a listed company, he can serve as an independent director in a maximum of three companies. Also, if one has completed five years or more as an independent director, he will be eligible for just one more term of five years. Managerial remuneration will be decided by a compensation committee headed by an independent director.

25. Moderation in farm support prices will help

ease inflation: Moderation in agricultural support price will ensure that these prices only provide a baseline level of support when the farmer is in difficulty, without displacing market prices. Raising energy prices to market levels will also lead to lower inflation over the medium term, the horizon over which the RBI is trying to contain inflation. The reason is that higher prices will reduce excessive consumption, reduce subsidies and fiscal deficits, and incentivise investment and competition, even while allowing prices to be determined by an increasingly stable and plentifully supplied global market for energy.

26. IIP contracts 0.6%; retail inflation eases to 2-year low in Jan: Growth in industrial production remained negative for the third month in a row, contracting 0.6 per cent in December 2013, mainly due to the sluggish performance of the manufacturing sector. However, retail inflation for January 2014, eased to a two-year low of 8.79 per cent as against 9.87 per cent in the previous month.

27. Bitcoins are still under the lens: RBI Governor Raghuram Rajan has said the central bank is currently trying to understand virtual currencies and will come out with a more considered view on it. In December, the RBI had cautioned users, holders and traders of virtual currencies about potential financial, operational, legal and


security-related risks they are exposing themselves to. The Government has said creation, trading or usage of virtual currencies as a medium of payment are not authorised by any central bank or monetary authority.

28. Trade deficit halves in January on fall in gold, silver imports: India’s trade deficit fell by half to $9.92 billion in January from $18.87 billion in the corresponding month last year, with the Government succeeding in cutting down gold and silver imports through higher import duties and other curbs. Total imports fell 18.07 per cent year-on-year to $36.57 billion due to a 77 per cent drop in gold and silver imports, while exports increased a modest 3.79 per cent to $26.75 billion over the corresponding month last year. A low trade deficit is necessary to contain the current account deficit, and this in turn helps to maintain a healthy balance of payments. A high current account deficit, on the other hand, weakens the domestic currency and keeps away foreign investors.

29. Marked drop in complaints against direct selling and recovery agents: According to the annual report on the Bank Ombudsman scheme, prepared by the Reserve Bank of India complaints against direct selling agents and recovery agents declined to 351 at the end of 2012-13 against 1,722 at the end of 2010-11.

30. Maruti 800 production stopped: The country’s largest carmaker Maruti Suzuki has stopped production of its nearly three-decade-old popular car Maruti 800 with effect from January 18. The small car was being sold in non-metros in the last two years. But with the stoppage of production, it will now no longer be available to the public.

31. Sugar industry calls for changes to bank loan scheme: The Indian sugar industry has urged the Government to ease or remove key conditions of the proposed bank loan scheme to clear the dues to cane farmers. In December last year, the Cabinet Committee on Economic Affairs had approved Rs. 6,600-crore interest-free loan to the sugar industry and announced that the 12 per cent interest subvention would be borne by the Government.

32. Rs. 10 plastic note to be tried out in five cities:

About 1billion Rs. 10 plastic notes will be introduced on a trial basis in five cities — Kochi, Mysore, Jaipur, Shimla and Bhubaneswar. The

field trial is expected to be launched in the second half of 2014.

33. 4 more States identified for Aadhaar

enrolment: Aadhaar enrolment in four States — Uttar Pradesh, Bihar, Chhattisgarh and Uttarakhand — will be carried out in addition to enrolment by the Registrar General of India (RGI). As of now, over 57-crore Aadhaar numbers have been generated, facilitating the roll-out of the Direct Benefits Transfer (DBT) scheme in select districts. At present, the DBT scheme covers 28 Centrally-sponsored schemes in 121 districts.

34. Justice Mathur to head 7th Central Pay panel: The Government has approved the composition of the Seventh Central Pay Commission. The Commission will be headed by former Supreme Court Judge Ashok Kumar Mathur. The Commission has been mandated to submit its report in two years’ time and its recommendations would be implemented from January 1, 2016.

35. RBI releases Report of the Committee on Financial Benchmarks: The Committee was headed by Shri P. Vijaya Bhaskar, Executive Director, RBI to study various issues relating to financial benchmarks in India.


36. Report on Enabling PKI in Payment System Applications: RBI has released, the Report of the Technical Committee on Enabling Public Key Infrastructure (PKI) in Payment System Applications.

37. Committee to examine FSLRC Recommendations: RBI has constituted a Committee headed by Shri G. Gopalakrishna, Executive Director, Reserve Bank of India to examine issues relating to Capacity Building in Banking Sector as suggested by the Report of the Financial Sector Legislative Reforms Commission (FSLRC).

38. Report of the Technical Committee on Mobile Banking: RBI has released the "Report of the Technical Committee on Mobile Banking" which was headed by Shri B. Sambamurthy, Director, Institute for Development and Research in Banking Technology, to examine the options/alternatives including the feasibility of using encrypted SMS based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country.

WISH YOU GOOD LUCK FOR UPCOMING

SBI PO 2014 EXAM - Team BANKERSADDA & CAREER POWER

Financial awareness capsule_sbi_po

Education

Transcript of Financial awareness capsule_sbi_po