Banking and Financial Awareness – 107

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03 Mar, 2016

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1) The banking and business transactions were affected on 8 January 2016 as bank employees of several PSU banks went on a 1-day strike on the call given by the All India Bank Employees’ Association (AIBEA). Why was this strike held? – To protest against violation of employees service agreements by the five associate banks of the State Bank of India (SBI)

Explanation: The 1-day strike was held to protest against the violation of bilateral settlement by the five associate banks of SBI and their attempt to force unilateral service conditions on the employees. In May 2015, the Indian Banks’ Association (IBA) and the AIBEA signed a common settlement, which defined the duties and remuneration of employees for jobs in the banks. The five associate banks of SBI are party to this settlement, and hence are governed by the same.

However, the managements of the associate banks are implementing the service conditions of SBI, which the AIBEA feels is illegal and in violation of the settlement. SBI has a different set of service conditions for its employees, based on an agreement between its management and union, and is not applicable to other banks.

SBI has five associate banks – State Bank of Travancore, State Bank of Mysore, State Bank of Patiala, State Bank of Hyderabad, and State Bank of Bikaner and Jaipur.



2) What is the name given to SBI’s first specialized for catering to the financial needs of start-ups that was opened on 14 January 2016 in Bengaluru? – ‘SBI InCube’

Explanation: ‘SBI InCube’ is the name of the first of the proposed series of branches that will cater to the specific financial needs of start-ups in the country. First ‘SBI InCube’ branch was opened on 14 January at St. Mark’s Road in Bengaluru.

The branch will assist start-ups in cash management, taxation, regulations, foreign exchange and remittances, mentoring, and other financial services’ needs. However, InCube, in its current form, will not fund start-ups.

SBI has tied up with investors like chairman of Manipal Global Education Services and Aarin Capital T.V. Mohandas Pai, co-founder and ex-chief executive of Infosys Ltd Nandan Nilekani and software product think tank iSpirt to help mentor and connect start-ups.


3) Which private sector bank on 14 January 2016 claimed to have become the first private sector bank in India to cross Rs. 1 lakh crore mark in mortgage disbursals? – ICICI Bank

Explanation: India’s largest private-sector bank ICICI Bank’s mortgage disbursals have crossed the Rs1 trillion (Rs. 1 lakh crore) mark recently, as was claimed by the bank on 14 January. Bank also claimed that its home loan is growing at about 25% on a year-on-year basis.

The bank’s average ticket size for home loans is at aboutRs.35-36 lakh. ICICI bank also launched ‘Express Home Loans’ – a web-based portal that allows prospective customers to upload know your customer (KYC) and income documents to receive a final approval on their home loan applications within eight working hours.


4) Which associate bank of SBI was imposed a fine of Rs. 1 crore by the RBI during January 2016 for violation of some of its instructions? – State Bank of Travancore

Explanation: The penalty on State Bank of Travancore (SBT) was imposed for violation of RBI’s including reporting of data to Central Repository of Information on Large Credits (CRILC). RBI set up CRILC to collect, store, and disseminate data on all borrowers’ credit exposures.

Banks are required to report all such information here, including classification of an account as SMA (Special Mention Accounts), on all borrowers having aggregate fund-based and non-fund-based exposure of Rs. 5 crore and above.

SBT has its headquarters in Thiruvananthapuram and is one of the most prominent associate banks of the SBI. It was formerly known as the Travancore Bank Ltd and became associate bank of SBI in 1960.


5) The Union Cabinet on 6 January 2016 approved the conversion of MUDRA Ltd, a non- banking financial company (NBFC), into MUDRA Bank. This bank thus will become a wholly-owned subsidiary of which entity? – SIDBI

Explanation: The MUDRA bank (or MUDRA Small Industries Development Bank of India (SIDBI) Bank) will undertake re-finance operations and provide support services with focus on portal management; data analysis etc. apart from any other activity entrusted or advised by Government of India.

The Union Cabinet also gave its approval for setting up of a Credit Guarantee Fund for loans disbursed under the Pradhan Mantri Micro Units Development Refinance Agency (MUDRA) Yojana. The National Credit Guarantee Trustee Company Ltd (NCGTC Ltd), a wholly-owned company of Government of India, constituted under the Companies Act to manage and operate various credit guarantee funds, shall be the Trustee of the Fund.

MUDRA Bank and a Credit Guarantee Fund was proposed to be set up with a refinance corpus of Rs. 20,000 crore and a corpus of Rs. 3,000 crore respectively in the Budget 2015-16.



6) Who was named ‘Global and Asia-Pacific Central Bank Governor of the Year 2015’ by the ‘Banker’ magazine, as announced on 7 January 2016? – Raghuram Rajan, Governor of RBI

Explanation: The ‘Banker’ is a prestigious monthly magazine of the ‘Financial Times Group’. The magazine selected RBI Governor Raghuram Rajan for ‘Global and Asia-Pacific Central Bank Governor of the Year 2015’ award as announced on 7 January.

Rajan was selected for his efforts in stabilising the Indian rupee, initiating key reforms to attract much needed foreign capital in the country and reining in a runaway price appreciation.

The RBI governor has been named central bank governor of the year several times by other international magazines. In October 2014, ‘Euromoney’ and in January 2015, ‘Central Banking’ awarded him the best central banker award for his contribution in stabilising the Indian economy.


7) Which private sector bank has recently partnered FINO PayTech to foray into the payments bank space, as announced on 8 January 2016? – ICICI Bank

Explanation: By tying up with FINO PayTech, ICICI Bank has joined some of the leading lenders of the country which have partnered with payments banks that have received licence from the banking regulator RBI. For example, State Bank of India and Kotak Mahindra Bank have picked up stake in the payments banks that will be floated by Reliance Industries and the Bharti Group, respectively.

FINO Paytech had received ‘in principle’ licence from the Reserve Bank of India (RBI) to start a payment bank. RBI regulations allow universal banks to invest up 30 per cent in payments bank.


8) Which PSU bank has agreed to buy four premium Mumbai flats belonging to Air India in an all-cash deal of Rs. 90 crore under airline’s asset monetization plan? – State Bank of India

Explanation: State Bank of India (SBI) has agreed to buy four premium flats in Mumbai’s posh Peddar Road area from the loss-making Air India for Rs. 90 crore. SBI is planning to allocate these four flats to its top executives. Each of these 3-BHK flats has a carpet area of 2,033 sq ft.

The Union Government recently gave go-ahead to state-owned Air India to sell the flats to SBI for about Rs. 90 crore as part the airline’s asset monetization plan.

Faced with substantial debt burden, the national carrier Air India has been exploring various options to raise money to meet its funding requirements. SBI has already taken two floors in the nearly-empty 22-storey Air India Towers at Nariman Point, which till a few years ago was the headquarters of the national carrier. The cash-starved airline was looking to sell these flats for the past two years.


9) What is the name of the founder of the scam ridden non-banking finance company PACL Limited who was arrested by sleuths of the CBI on 8 January 2016 for cheating investors for over Rs. 45,000 crore? – Nirmal Singh Bhangoo

Explanation: The arrest of Nirmal Singh Bhangoo came 17 months after markets regulator the Securities and Exchange Board of India (SEBI) ordered PACL to return money to millions of investors, saying the company was running an illegal investment scheme. The scheme promised depositors returns on investments in agricultural land.

The case involves alleged collection of about Rs. 45,000 crore from roughly 55 million investors across the country, making it the biggest financial scandal.


10) Which state on 5 January 2016 became the first to sign a memorandum of understanding (MoU) with the Centre for the Ujwal Discom Assurance Yojana (UDAY) reforms for state-owned power distribution companies? – Jharkhand

Explanation: Mineral-rich but energy-deficient state of Jharkhand became the first state to sign an MoU with the Union Government for the ambitious Ujwal Discom Assurance Yojana (UDAY) reforms scheme. Jharkhand Chief Minister Raghubar Das and Piyush Goyal, Union Minister of State for Power, Coal and New & Renewable Energy were present during the signing ceremony held on 5 January.

UDAY is the financial turnaround and revival package for electricity distribution companies of India initiated by the Union Govt. with the intent to find a permanent solution to the financial mess that the power distribution is in. The Cabinet had in November 2015 approved UDAY to ease the financial crunch faced by power distribution companies (discoms). The scheme was launched to tackle the Rs 4.3 lakh crore debt on discoms besides measures to cut power thefts and align consumer tariff with cost of generating electricity.


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