Banking and Financial Awareness – 102

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15 Nov, 2015

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1) The Reserve Bank of India (RBI) during October 2015 initiated corrective action at which public sector bank on the grounds that its management is unable to revive it? – Indian Overseas Bank (IOB)

Explanation: Chennai-based Indian Overseas Bank (IOB) has reported low return on assets for four consecutive quarters from July 2014.

  • The bank had posted a loss of Rs. 245 crore for June-September 2014 and a loss of Rs 516 crore in October-December 2014.
  • Under the corrective measures, the RBI has curtailed the bank’s branch expansion and recruitment drives. However, no lending curbs have been imposed. RBI is also monitoring the bank every month.

2) Sleuths from the Central Bureau of Investigation (CBI), Enforcement Directorate (ED) and Serious Fraud Investigation Office (SFIO) raided a Delhi branch of which public-sector bank on 10 October 2015 to investigate a case associated with illegal foreign transfers? – Bank of Baroda

Explanation: Officials of Bank of Baroda (BOB) recently stumbled upon illegal transfers of Rs 6,172 crores in foreign exchange made to Hong Kong. The money was transferred by some 59 companies through newly opened current accounts in BOB’s Ashok Vihar branch in Delhi.

  • Although these transactions happened in BOB’s branch, the bank will not suffer any losses since it had not lent any money to the company and the group of companies which is suspected to have been involved in such deals.
  • The dubious transactions came to light when the internal inspection department found out how there are transfers of just about $100,000 to same entities on the same day. The pertaining software has a threshold of $100,000 to throw up an alert. It immediately alerted the head office. Following this a flash report was issued and the bank filed an FIR.

3) Which private bank recently received the approval of the Reserve Bank of India (RBI) to set up a mutual fund, asset management company (AMC) and a trustee company?- Yes Bank

Explanation: This disclosure was made by the management of Yes Bank, which is presently the fifth largest private bank in India. The bank hopes that the AMC will channelize savings of retail and institutional investors in equity and debt capital markets.

  • The approval for mutual fund is expected to complement Yes Bank’s retail liabilities strategy and also allow the AMC to leverage the Bank’s distribution network for customer acquisition.

4) Which bank was listed as the worst performer among the public sector banks (PSU banks) for registering the highest increase in gross non-performing assets (NPAs) in percentage terms against total loans for last fiscal year, as disclosed in recently released data by the RBI? – UCO Bank

Explanation: According the provisional data of the RBI, the gross NPA to gross advances ratio of Kolkata-based UCO Bank increased to 8.05% at the end of March 2015 from 4.47%, thus registering a huge increase of 3.58 on annual basis. It was followed by Indian Overseas Bank (IOB) and Bank of Maharashtra (BoM) with gross NPA rising to 8.30% and 6.18%, respectively, at the end of March 2015. In case of Indian Overseas Bank, variation compared to the previous financial year was 3.46 whereas it was 3.02 for Bank of Maharashtra. Rising NPAs have hit the bottom line of banks and to strengthen their balance sheet, the government is providing Rs. 25,000 crore capital support in the current fiscal year.


 

5) The Annual Meetings of the Boards of Governors of the World Bank Group (WBG) and the International Monetary Fund (IMF) or the 2015 WBG/IMF Annual Meetings was held between 6 and 12 October 2015 at which city? – Lima (Peru)

Explanation: The 2015 WBG/IMF Annual Meetings are the Annual Meetings of the Boards of Governors of both World Bank and IMF, the world’s most important multilateral agencies.

  • The heads of World Bank and IMF and the Finance Ministers and Central Bank Governors of all 188 member countries took part in this week-long meeting. Over 16 thousand participants also took part in the multilateral event.
  • The 2015 WBG/IMF Annual Meetings serve to discuss international economic and financial developments, the state of the global economy, and policies to reduce poverty and promote inclusive economic growth.
  • It is after 48 years that these important series of annual meetings are being held in Latin America. The last time the WBG/IMF Annual Meetings were held in the region was in 1967, in Rio de Janeiro, Brazil.

6) China on 8 October 2015 launched the much anticipated international payment system that seeks to provide global dimensions to its currency Yuan. What is the name of this payment system? – China International Payment System (CIPS)

Explanation: Launch of CIPS is being seen as a milestone event in China’s bolstering of Yuan’s global usage and furthering cross-border clearing of its currency from the Chinese mainland instead of offshore centres abroad.

  • CIPS will provide capital settlement and clearing services for cross-border Yuan transactions for financial institutions domestically and abroad and will effectively enhance efficiency and increase global use of the Chinese currency.
  • Till-now, cross-border Yuan clearing had to be done either through one of the offshore Yuan clearing banks in places like Hong Kong, Singapore and London, or else with the help of a corresponding bank on the Chinese mainland.
  • China’s Yuan became one of the world’s top five payment currencies in November 2014, overtaking the Canadian dollar and the Australian dollar, according to global transaction services organisation SWIFT.

7) Which private bank during October 2015 claimed that it has become the first bank globally to launch a mobile app-based on ‘mVisa’, a new mobile payment solution from Visa? – ICICI Bank

Explanation: ICICI Bank, India’s largest private sector bank, launched a service to enable customers to make electronic payments from their smartphones at physical stores, e-commerce and other deliveries at home, radio taxis, and utility billers, among others. This service is based on ‘mVisa’, Visa’s new mobile payment solution.

  • With this service, users of ‘Pockets’, ICICI Bank’s app, can make cashless payments from their smartphones using their debit card by simply scanning an ‘mVisa’ Quick Response (QR) code at a merchant location without swiping the card at an EDC machine. This service thus provides customers the convenience of speed to complete a transaction along with enhanced security as the card remains in the possession of the customer.
  • To start with, this facility has been introduced in Bengaluru with 1,500 merchants and will shortly be extended to other cities.

8) During August 2015 what landmark achievement was made by the Union Govt. in the area of fiscal balance, as disclosed in the pertaining data released during October 2015? – During August 2015 India’s fiscal balance turned from deficit to surplus for the first time in 8 years

Explanation: According to the data released by the Controller-General of Accounts (CGA) recently, India’s fiscal deficit was (-) Rs. 15,808 crore in August 2015. The negative figure indicates surplus of revenues over expenditure. In contrast, the Centre ran up a fiscal deficit of Rs. 73,005 crore in August 2014.

  • The total revenue was Rs. 1,47,022 crore in August 2015 against Rs. 71,578 crore in July 2015. In contrast, the total expenditure in August 2015 was Rs. 1,31,214 crore against Rs. 1,69,986 crore in July 2015.
  • Fiscal deficit is the excess of the Centre’s expenditure over its revenues. This is after 8 years that India’s fiscal deficit has turned negative. A sharp surge in the Centre’s revenue receipts as well as a steep decline in its total expenditures made the fiscal surplus (or negative fiscal deficit) possible.

9) Who won the Nobel Prize in Economics for 2015 as announced on 12 October 2015? – Angus Deaton (United States)

Explanation: Angus Deaton is a professor of Princeton University, New Jersey (US). He was awarded this prestigious award “for his analysis of consumption, poverty, and welfare”.

  • By linking detailed individual choices and aggregate outcomes, Deaton’s research has helped transform the fields of microeconomics, macroeconomics, and development economics. The work for which he is being awarded with the Nobel, revolves around three central questions: a) How do consumers distribute their spending among different goods? b) How much of society’s income is spent and how much is saved? and c) How do we best measure and analyze welfare and poverty?
  • The Economics Nobel Prize is officially known as the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel. It wasn’t created by Nobel, but by Sweden’s central bank in 1968. Though it’s handed out along with the other prizes and the criteria for selecting winners are the same, it’s not a Nobel Prize in the same sense.

10) Which country has overtaken the United States in terms of population of middle class to become the world’s largest, as disclosed in a latest report on global wealth by Credit Suisse? – China

Explanation: The latest Global Wealth Report by Swiss bank Credit Suisse has disclosed that with 109 million adults China has become world’s largest middle class country. It has replaced the United States, which has around 92 million of its populace under middle class. China now accounts for a fifth of the world population, while holding nearly 10 percent of the global wealth.

  • The report said size and wealth of the middle class was a key factor in economic development, and the middle class was often at the heart of political movements and new consumption trends.
  • Overall, the report found that global wealth fell by nearly 5 percent in the year to mid-2015 to $250 trillion due a strengthening of the US dollar in which income is compared.

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