Banking and Financial Awareness – 109

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14 Apr, 2016

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Banks-Bureau-2016

1) Union Govt. on 28 February constituted a new entity that will search for and appoint heads of state-run banks, and aid banks in capital-raising and developing business strategies. What is the name of this entity, whose establishment was proposed in 2015 as part of the government’s ‘Indradhanush’ programme to revamp the functioning of the state-run banks? – Banks Board Bureau (BBB)

Explanation: Banks Board Bureau (BBB) was established on 28 February 2016. The main function of this entity will be to advise the government on top-level appointments at public sector lenders and ways to address the bad loans problem among other issues.

It officially started functioning from 1 April 2016.

The BBB has been established by the government as a body of eminent professionals and officials, which will replace the Appointments Board for appointment of Whole-time Directors as well as non-Executive Chairman of PSBs.

The BBB been set up at a time when public sector banks are grappling with a huge problem of bad loans with their collective gross NPAs (Non-Performing Assets) approaching Rs. 4 lakh crore level.

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Gyan-Sangam-2016

2) The second edition of ‘Gyan Sangam’ (bankers’ retreat) started on 4 March 2016 at which place? – Gurgaon

Explanation: ‘Gyan Sangam’ is the name given to the annual conclave of the top officials from banks, Finance Ministry and the Reserve Bank of India (RBI) to take stock of the developments in the banking sector and brainstorm on the issues that bog down stakeholders at various fronts.

While the first edition of ‘Gyan Sangam’ was held in 2015 in Pune, the second edition was held on 4 and 5 March 2016 at Gurgaon. Seven months after the 2015 conclave, the government announced the seven-point reforms roadmap, Indradhanush, detailing the measures it would take to revamp public sector banks.

‘Gyan Sangam’ 2016 was held at a time when 12 public sector banks had reported losses, the stock of bad loans across listed banks jumped by Rs.1 trillion in a single quarter and capital positions of these public sector lenders eroded.

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Amit-Mitra-2016

3) On 19 February 2016 who was appointed the Chairman of the Empowered Committee of state finance ministers that represents all states and will play a crucial role in implementing the goods and services tax (GST)? – Amit Mitra (West Bengal Finance Minister)

Explanation: The Union Govt. appointed West Bengal Finance Minister Amit Mitra as chairman of the Empowered Committee of state finance ministers. This was announced on 19 February 2016 by Minister of State for Finance Jayant Sinha.

Mitra, belonging to the Trinamool Congress (TMC), has been the finance minister of West Bengal since 2011, when his party came to power in the state. Prior to taking over as the state’s finance minister, Mitra had held the post of Secretary General at industry lobby, the Federation of Indian Chambers of Commerce and Industry (FICCI).

The Empowered Panel will play a role in putting together the final contours of GST’s design, spearheading its implementation and achieving consensus on some of the differences between states as well as between the Centre and the states.

The post fell vacant in November 2015 after the previous incumbent, K.M. Mani, stepped down as Kerala finance minister following corruption allegations.

The government will miss the 1 April 2016 deadline for rolling out GST but is hopeful of doing so sometime later in the next fiscal year.

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4) Union Finance Minister Arun Jaitley presented the Union Budget 2016-17 on 29 February 2016. Main feature of this budget was its focus on agriculture and infrastructure sector. However, no change in income tax slab was announced. The Service Tax increased to 15% after imposition of which Cess of 0.5% as announced in the Budget? – Krishi Kalyan Cess

Explanation: Budget 2016-17 proposed to impose a Cess, called the Krishi Kalyan Cess, of 0.5% on all taxable services. The new effective Service Tax hence increased to 15% from 14.5%.

The proceeds of Krishi Kalyan Cess would be exclusively used for financing initiatives relating to improvement of agriculture and welfare of farmers. The Cess will come into force with effect from 1st June 2016.

While presenting the Budget 2015-16, the Finance Minister had increased the Service Tax Rate from 12.36% to 14%. This new rate of Service Tax of 14% was applicable from 1 June 2015. Moreover from 15 Nov 2015, Swachh Bharat Cess of 0.5% also got applicable. Therefore the effective rate of Service Tax is currently at 14.5% with effect from 15 Nov 2015. This is now poised to reach 15% with the imposition of the Krishi Kalyan Cess.

Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act, 1994.

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5) The Union Cabinet on 24 February 2016 took which important decision pertaining to payments made through debit and credit cards, or over internet, for public services? – It decided to do away with levying surcharge on such payments

Explanation: The move to abolish surcharge on payments made through debit and credit cards, or over internet, for public services aims at reducing cash transactions. This will help in increasing cashless transactions for public services.

Decision to promote debit/credit cards and digital payments will help check the menace of black money. Cashless transactions have been on the rise in India, but remain modest in comparison to cash payments.

Levy of surcharges on card payments is seen as one important reason for slow growth for card payments.

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6) Union Finance Minister Arun Jaitley tabled the Economic Survey for 2015-16 in the Parliament on 26 February 2016. The Survey primarily called for fiscal prudence and stable inflation, while acknowledging the risks to growth. Economic Survey, which is often known as the flagship document pertaining to the direction of country’s economy, is prepared by which official? – Chief Economic Adviser

Explanation: The Economic Survey for 2015-16, prepared by Chief Economic Adviser Arvind Subramanian termed India as a “haven of stability” and an “outpost of opportunity” amidst gloomy international economic landscape.

Main conclusions of Economic Survey 2015-16:

The Survey expects India’s GDP to growth at 7-7.75% during 2016-17

The Govt. is expected to achieve fiscal deficit target of 3.9% of GDP during 2015-16

The Survey argued for adhering to 3.5% fiscal deficit target during 2016-17

Consumer price or retail inflation is seen around 4.5 to 5% in 2016-17 as against 4.9% between April to January 2016

India’s current account deficit is seen around 1-1.5% of GDP during 2016-17

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7) Union Rail Minister Suresh Prabhu presented the Rail Budget for 2016-17 on 25 February 2016. The main feature of the budget was that there was no increase in passenger as well as freight charges. The Rail Minister conceded that the impact of the 7th Pay Commission award will affect the Railways severely. What the proposed Operating Ratio is for 2016-17 as announced in the Budget? – 92%

Explanation: Operating ratio is a measure of efficiency that denotes the amount spent for earning every Rs.100 of revenue. The lower the ratio, the better it is. It is a key figure to understand the operational efficiency of an organisation.

The operating Ratio for 2015-16 was 90%. Thus it has deteriorated from 90% to 92%. It means that the Railways will spend Rs. 92 to earn Rs. 100 in financial year 2016-17.

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8) The ministry of corporate affairs (MCA) ordered a merger between two entities on 12 February 2016 which was the first time that the government forced a merger between two private entities, using a provision of the Companies Act that allows it do so in public interest? – Financial Technologies India Ltd (FTIL) and National Spot Exchange Ltd (NSEL)

Explanation: The MCA on 12 February 2016 ordered a merger between Financial Technologies India Ltd (FTIL) and its unit National Spot Exchange Ltd (NSEL), making FTIL responsible for the liabilities of the fraud-hit commodities bourse.

It’s Thus also became the first – ever instance of the Union Govt. forcing a merger between two private entities, using a provision of the Companies Act that allows it do so in public interest.

FTIL, controlled by entrepreneur Jignesh Shah, immediately said it will challenge the order in the Bombay High Court. FTIL owns 99.99% of NSEL, on which trading was suspended after a Rs. 5,574.35 crore fraud at the latter came to light in July 2013.

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9) The Union Cabinet gave its approval to the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA) on 17 February 2016. TPA seeks to ease customs procedures to boost commerce. India has thus become …………country to approve TPA – 71st

Explanation: India on 17 February 2016 became the 71st country to give its approval to the World Trade Organization’s (WTO) Trade Facilitation Agreement (TFA). To implement this ambitious agreement, two-thirds of the total members, or 107 countries, have to approve it.

TPA aims to expedite the movement, release and clearance of goods, including goods in transit, for international trade. For this purpose, it sets out measures for effective cooperation between customs and other appropriate authorities on trade facilitation and customs compliance issues.

According to the WTO, full implementation of TFA could increase global merchandise exports by up to $1 trillion annually. The overall boost to world export growth has been estimated at 2.7% per annum.

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10) The Securities and Exchange Board of India (SEBI) on 17 February 2016 constituted a committee for disposing of the land purchased by PACL Ltd in order to refund people who have invested in the company’s various funds for purchase of land. Who was appointed the head of this committee? – Justice R.M. Lodha (Ex-Chief Justice of India)

Explanation: The committee was formed after the Supreme Court ordered SEBI to do so to carry out the refund process to PACL’s investors. While Justice R.M. Lodha is heading the committee, S. Raman, a whole-time member of SEBI, and Amit Pradhan, the chief general manager and regional director of SEBI’s North Regional Office, will be the two members working for the committee.

On 2 February, SEBI had penalized PACL and nine of its directors a total of Rs.23.32 crore for allegedly violating SEBI norms on collective investment schemes (CIS) and illegally mobilizing Rs.49,100 crore from investors between 1996 and 2014.

SEBI had said in an order that the company and its directors had been mobilizing funds from general public through CIS since 1996 without a legitimate licence from it.

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