Banking and Financial Awareness – 49

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09 Feb, 2014

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1) To promote women entrepreneurship, the country’s first women’s bank – the Bharatiya Mahila Bank (BMB) – has chosen to do away with collateral for loans availed by women. The BMB will provide collateral-free loans for amounts up to Rs 1 crore. Which entity would cover the risk under this initiative? –  Credit Guarantee Fund Trust for Micro and Small Enterprises – CGTMSE (The CGTMSE is a credit guarantee scheme, where a premium is paid either by the lender or the applicant, provides a guarantee cover for up to 80% of loans availed by women owned or operated micro- and small enterprises. For loans availed for smaller amounts such as Rs 20,000, the bank will completely waive off the requirement for collateral)

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2) In a major overhaul of foreign investment regime, the government is considering splitting overseas inflows into two categories – Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) – with a minimum composite cap of 49%. The proposal envisages an aggregate automatic limit of 24% of FPI, which may be raised up to the extent of FDI permitted under the automatic route. Constituting two categories for foreign investments is considered by which panel? – Mayaram Panel (The government had set up a four-member committee headed by Economic Affairs Secretary Mayaram to define FDI and FII and remove the ambiguity between them. The Committee submitted its final report during the last week of January 2014)

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3) Who was the head of RBI’s committee on strengthening monetary policy framework, which in its recommendations has suggested that the target for inflation should be set at 4% with a band of +/- 2% around it? – Urjit Patel, Deputy Governor of the RBI (This inflation target is in view of vulnerability of the Indian economy to supply/external shocks and the relatively large weight of food in Consumer Price Index (CPI))

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4) The Reserve Bank of India during January 2014 constituted an 8-member expert committee to review the governance of bank boards in India, which includes examining the ownership and salary structure of banks. Who heads this committee? – PJ Naik, former Chairman and CEO of Axis Bank (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)

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5) Which bank came to highlight during January 2014 for declaring an interim dividend of 9000%, which is said to be the highest in India’s banking industry? – Tamilnad Mercantile Bank – TMB (Tuticorin-based TMB took a decision to this effect at a meeting held on 18 January 2014. This dividend stands at Rs. 900 per share of Rs 10 each, for the fiscal ending March 2014. This is the second year in a row that the bank has declared such a high dividend. The bank’s board had approved a dividend of Rs 750 per share for 2008-09 and Rs 1,000 per share the following year)

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6) Who retired as Deputy Governor of the Reserve Bank of India (RBI) on 20 January 2014? – Anand Sinha (With Anand Sinha relinquishing his charge as Deputy Governor, the RBI re-allocated his portfolios among the remaining three Deputy Governors — K.C. Chakrabarty, H.R. Khan and Urjit Patel. Sinha was in-charge of eight departments, including Departments of Banking Operations and Development, Risk Management, Information Technology and Expenditure and Budgetary Control)

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7) The Union Government on 20 January 2014 allowed the establishment of an ad hoc authority to recommend the pricing of the passenger and cargo segments. What is the name of this authority? – Rail Tariff Authority (Rail Tariff Authority will have a Chairman and four members. The decision to have an ad hoc arrangement through a government resolution was taken because establishing it through an executive order, as had been desired by the Cabinet, was not feasible given that under the Railway Act only the Railway Board can decide on the prices of rail services. For constitution of the RTA, an amendment to the Railway Act, 1989, is also necessary)

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8) A prominent Indian credit rating agency along with four other rating agencies from Europe, Asia, Africa and Latin America during January 2014 launched a new credit rating outfit ARC Ratings S.A. The network-based rating agency would provide credit rating services to cross-border corporates in terms of accessing global capital. Which Indian rating is involved in this initiative? – CARE – Credit Analysis and Research (ARC Ratings will be an equally held entity and have its operational headquarters in London. Each partner’s shareholding is capped at a maximum of 25%. ARC will rate sovereign debt, financial institutions, non-financial corporations as well as structured products)

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9) China’s economy grew by 7.7% in 2013, which is far below the standards of China – world’s second-largest economy. The economic growth rate of 2013 is the lowest since which year? – 1999 (2013’s growth is the lowest in 14 years. This marks the slowest growth since 1999, when China grew 7.6%. The previous decade saw record double-digit growth, with the country defying the global slowdown to grow 10.4% in 2010 as it unveiled a massive $ 586 billion stimulus. This declining growth underlines the challenges faced by China as it grapples with rebalancing and reviving a slowing down economy)

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10) Which stock exchange retained its position as the world’s largest bourse in terms of equity trades for the second consecutive year in 2013? – India’s National Stock Exchange (NSE) – NSE recorded almost 145 crore equity trades on its platform last year, a gain of 3% from 2012, making it the biggest among 51 global peers, according to data with the World Federation of Exchanges (WFE). Rival exchange BSE slipped one place to eighth position. Although it has more than 4,000 listed companies, the BSE recorded 34.46 crore trades last year, a drop of 3% compared to 2012. China’s Shenzhen Stock Exchange recorded 129 crore trades, climbing three places to become the second-largest bourse in the world. Trades on the Shenzhen SE, which pushed NYSE Euronext to third place, rose 38% from 2012

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