Banking and Financial Awareness – 110

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07 May, 2016

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1) During March 2016, the RBI came out with which important instruction pertaining to savings bank accounts? – It mandated that banks should credit interest on savings deposit at quarterly or shorter intervals

Explanation: According to the guidelines in a circular circulated by the Reserve Bank of India (RBI) on 3 March 2016, the banks have been directed to pay interest on savings bank accounts on a quarterly basis or shorter duration.

At present, the interest is credited in savings bank accounts on a half-yearly basis. The interest rate on a savings bank account is calculated on a daily basis since 1 April 2010.

According to estimates, the lower periodicity of interest payments might put a burden of Rs. 500 crore on banks.

Earlier, banks used to give interest of 3.5% on savings accounts on the basis of the least amount deposited in an account between the 10th and the last day of each month.

While public sector banks offer 4% interest on savings deposits, private players offer as much as six per cent.

In 2011, the RBI had decided to give freedom to commercial banks to fix savings bank deposit rates, the last bastion of the regulated interest-rate regime.

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2) Which private bank on 8 March 2016, on the occasion of the International Women’s Day, announced that it will allow women employees to work from home for up to a year? – ICICI Bank

Explanation: In its latest initiative, ICICI Bank on 8 March said that it will allow its 21,000 women to work from home for up to a year and even take their children and care-giver on business trips, in a move to retain talent.

The country’s largest private bank, which is headed by a woman (Chanda Kocchar), has about 70,000 employees, 30% of whom are women.

Two years ago, the bank conducted a survey among its women employees who left the bank and nearly two-thirds of those surveyed said they quit their job because of child care responsibilities and long commutes.

Taking cognizance of this problem, it rolled out of its iWork@home initiative on a pilot basis a few weeks ago and while the programme will enable employees to work from home for up to a year initially, it can be further extended.

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3) Which bank during March 2016 launched its revolutionary contactless mobile payments solution through which customers can initiate electronic payments from NFC enabled smartphones by just waving their phones near a contactless merchant terminal? – ICICI Bank

Explanation: ICICI Bank’s contactless mobile payments solution allows customers to make payments with their linked cards to the bank’s “Pockets” offering, by just tapping the mobile phone. The bank claims that this new service was one step ahead of the tap-and-pay solution the bank had been offering.

With this new service the customer doesn’t need to have his/her card at the time of making a payment as long as the card is linked to Pockets.” Pockets, is a digital banking service offered by ICICI Bank which has had about 3.3 million downloads so far.

This payments solution uses Host Card Emulation (HCE) technology apart from the Near Field Communication (NFC)-enabled card service. HCE will create ‘virtual’ cards for ‘physical’ credit or debit cards of the bank.

This virtual card will reside in the bank’s secure cloud server. By using the virtual cards, an ICICI Bank customer can initiate electronic payments from NFC enabled smartphones by just waving his/her phone near a contactless merchant terminal.

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4) Which bank is posed to introduce its mobile phone payment option for its credit card holders, as reported in the media on 12 March 2016? – SBI

Explanation: State Bank of India (SBI) has planned to make its credit cards sit in the user’s mobile phone so that payments through the host card emulation technology (HCE) can be facilitated. It means that no swiping or reading an embedded chip will be involved.

The French payments company, Worldline e-Payment Services, which works with almost all major banks in India in merchant acquisition and payments business, is currently working on introducing this technology in India.

Through this new technology, cards can sit in one’s mobile and payments will be made directly through the phone.

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5) Which banking entity is poised to become India’s first small area finance bank (SFB) in April 2016, as announced by the bank on 7 March 2016? – Capital Local Area Bank (CLAB)

Explanation: Jalandhar-based Capital Local Area Bank (CLAB) is set to become India’s first small area finance bank (SFB) as it starts its operations from 13 April 2016.

It will launch operations under a new name – Capital Small Finance Bank Limited and its launch will coincide with the auspicious festival of Baisakhi (the beginning of rabi harvest that gives a major boost to rural spending) in Punjab.

CLAB is the first among the 10 applicants to get final licence from the Reserve Bank of India (RBI). It is currently active as local area bank.

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6) Which Indian PSU bank is among the four new foreign banks that have been given preliminary approval to open 100%-owned branches in Myanmar as announced on 7 March 2016? – State Bank of India

Explanation: In the latest move by the Southeast Asian nation Myanmar to woo investment to the country long ruled by the military and hit by Western sanctions, its Govt. on 7 March allowed four foreign banks to operate in the country. These include India’s largest PSU bank SBI.

The other three new banks that have been given initial approval by the Central Bank of Myanmar are Vietnam’s Bank for Investment and Development, Taiwan’s E.SUN Commercial Bank and South Korea’s Shinhan Bank.

It is worth mentioning that in April 2016 Japan’s Tokyo-Mitsubishi UFJ became the first foreign bank in decades to open a branch in Myanmar.

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7) Officers and employees of regional rural banks (RRBs) went on a 2-day strike from 10 March 2016 to press for a host of demands including dumping the move for nationalisation of RRBs. Which entity associated with rural bank employees gave call for this strike? – United Forum of Regional Rural Bank Unions (UFEEBU)

Explanation: UFRRBU is an umbrella body of seven unions. They are opposing the RRBs Amendment Act 2015, which paved the way for infusion of private capital in the banks and thus diluting the social objectives of the institutions. There are 56 RRBs with a network of over 20,500 branches across 635 districts in the country.

The strike resulted in a four-day closure of the RRBs at a stretch with the subsequent two days (12 and 13 March) being public holidays.

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8) Indian credit ratings agency Crisil on 10 March 2016 downgraded the ratings of which 8 public sector banks? – Bank of India, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank, Syndicate Bank and Uco Bank

Explanation: The ratings of these 8 PSU banks were downgraded by Crisil on 10 March 2016. On the other hand the agency also changed the outlook, to negative from stable, on certain securities of five other banks- Andhra Bank, Bank of Baroda, Canara Bank, Punjab National Bank and Punjab and Sindh Bank.

The ratings were downgraded primarily due to increase in banks’ non-performing assets (NPAs).

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9) Which finance entity on 23 March 2016 announced not to pursue to set up payments bank and surrender its in-principle approval accorded by the Reserve Bank of India (RBI)? – Cholamandalam Distribution Services Limited

Explanation: Cholamandalam Distribution Services Limited (CDSL) is a subsidiary of Murugappa Group’s financial services arm Cholamandalam Investment and Finance Company Limited. It was one of the 11 firms which got in principle approval to set up payments banks under the Guidelines for Licensing of Payments Banks issued by the RBI on 27 November 2014.

On 23 March 2016 the company decided that it will not pursue to set up payments bank and that its focus would predominantly will be on financial inclusion and on the MSME sector.

Subsequently, CDSL will surrender the in-principle approval accorded to it by RBI for conversion into a payments bank.

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10) A 3-day conference to take stock of the Asian region’s economic performance and challenges ahead concluded on 13 March 2016 in New Delhi. What was the title of this conference that was attended by delegates from all Asian countries and was also addressed by Prime Minister Narendra Modi and International Monetary Fund (IMF) Managing Director Christine Lagarde? – “Advancing Asia”

Explanation: “Advancing Asia” Conference was held on 11, 12 and 13 March 2016 in New Delhi. It was organized jointly by Indian Govt. and the International Monetary Fund (IMF).

The conference dwelled upon some important topics such as – the most effective drivers of growth, income inequality, gender inequality, investments in infrastructure, climate change, managing capital flows and financial inclusion.

Addressing the conference Prime Minister Narendra Modi said India dispelled the myth that democracy and rapid economic growth could not go together.

IMF chief Lagarde described India as bright spot in the turbulent times for the global economy. She added that it was only befitting that the conference was being held in New Delhi.

India and the IMF also announced the signing of a Memorandum of Understanding (MoU) for establishing the South Asia Regional Training and Technical Assistance Centre. It is expected to become the focal point for planning, coordinating, and implementing the IMF’s capacity-development activities in the region.

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