Banking and Financial Awareness – 111

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17 Jun, 2016

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UPI-NPCI-2016

1) What is the name of the new payment interface that was launched as its most ambitious project by the National Payments Corporation of India Ltd (NPCI) on 11 April 2016 and is expected to bring about a significant shift in the way mobile banking transactions are conducted? – Unified Payments Interface (UPI)

Explanation: Unified Payments Interface (UPI) is the name of the revolutionary payments interface that was made live by the National Payments Corp. of India Ltd (NPCI) from 11 April 2016.

UPI will allow users to make payments using their mobile phone as the primary device without the need to download a wallet app to send or receive money. With the UPI, money transfer will be as simple as sending a text message.

Unlike the Immediate Payments Service (IMPS) which allows people to only send money, it will allow people to receive money and initiate requests, too.

It will be inter-operable across different banks and will allow instant payments. In the first phase, which was launched on 11 April, 29 banks will operate the UPI platform.

UPI is expected to bring about a sea change in the micro-payment landscape in the country.

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2) What important step pertaining Category-I banks so as to improve the ease of doing business in India was taken by the Union Govt. on 12 April 2016? – It empowered authorsied Category-I banks to approve establishment of branch office by foreign entities in India in most sectors

Explanation: Authorised Dealer Category-I banks, those dealing with forex, were empowered to approve establishment of branch office by foreign entities in India in most sectors by the Union Govt. on 12 April.

In addition to this, anyone who has been awarded a contract for a project by a government authority or public sector unit will be automatically given approval to open a bank account.

The arrangement will however, not be available to a few sensitive sectors, including defence, telecom, private security, information and broadcasting, and non-government organisations.

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3) Which country during April 2016 became the 189th and the latest member of the IMF and the World Bank? – Nauru

Explanation: Nauru, the tiny South Pacific island nation, on 12 April 2016 became the 189th and the latest member of the International Monetary Fund (IMF) and the World Bank.

Before Nauru, the last country to join the IMF and World Bank was South Sudan, in April 2012.

Nauru applied for membership in the Washington-based IMF and World Bank in April 2014, after joining the United Nations in 1996 as the world’s smallest independent republic.

By becoming the member of IMF Nauru can benefit from the crisis lender’s advice on managing government finances and monetary policy. On the other hand its association with the World Bank it gains access to financial support, technical support and special expertise in dealing with Pacific area issues, such as water and sanitation and disaster risk management amid the threat of climate change and rising sea levels.

These announcements were made as the Centre is trying hard to improve the ease of doing business.

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NDB-2015

4) The New Development Bank (NDB) of BRICS countries approved its first package of loans worth $811 million for four renewable energy projects in four member countries – Brazil, China, South Africa and India. Out of this $250 million was handed to India. Which Indian bank became the first bank in India to receive this loan? – Canara Bank

Explanation: The New Development Bank (NDB) of BRICS countries handed out $250 million to India’s Canara Bank for renewable energy projects as part of its first set of loans amounting to $811 million.

A bank in Brazil, a new energy company in China and the largest producer of electricity in South Africa, Eskom, are other recipients of NBD loans.

The financial assistance of $811 million has been given to Brazil, China, South Africa and India. Along with Russia, all four countries are founding members of the bank.

The money, to be disbursed in a staggered manner, will be used to support renewable energy projects with a capacity of 2,370 MW in the four countries. These projects will lead to reduction in greenhouse gas emissions by nearly 4 million tonnes a year.

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RBI-New-2015

5) What important monetary measure was announced in first bi-monthly monetary policy review meet of the RBI’s for 2016-17 that was held on 5 April 2016? – Repo Rate was reduced by 25 basis points

Explanation: The Repo Rate (or repurchase rate) is the interest rate at which the central bank provides short-term liquidity to banks. It was 6.75% till now and was reduced to 6.50% in the first bi-monthly monetary policy review for 2016-17 that was presented by Reserve Bank of India (RBI) Governor Raghuram Rajan on 5 April.

At 6.5%, the Repo Rate is the lowest since March 2011. The Reverse Repo Rate (RRR) was reduced to 6%, thus narrowing the difference between the Repo and Reverse Repo by 50 bps. Reverse Repo Rate is the rate at which banks park excess funds with the RBI. The marginal standing facility (MSF) rate was 7.0%. The Bank Rate which is aligned to the MSF rate also stood adjusted to 7.0%.

The RBI also reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 95% of the requirement to 90% with effect from the fortnight beginning 16 April 2016. But the CRR was kept unchanged at 4.0% of net demand and time liabilities (NDTL).

The RBI also retained its target of 5% consumer price inflation by March 2017 and GDP growth forecast for the year at 7.6%.

A reduction in all-important Repo Rate had been widely expected, although the quantum of his reduction had had mixed backers. The rate cut also suggested that the RBI has taken note of the central government’s commitment to fiscal discipline, freeing it up to infuse more liquidity into the system.

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6) Which entity became the latest entity to enter India’s mutual fund business as during April 2016 it filed papers with the SEBI for launching at least four mutual fund schemes? – Mahindra Asset Management Company (Mahindra AMC)

Explanation: Mahindra Asset Management Company (Mahindra AMC), a wholly-owned subsidiary of Mahindra and Mahindra Financial Services is the latest Indian conglomerate to enter country’s mutual fund markets. It had received capital market regulator Securities and Exchange Board of India (SEBI’s) approval to set up mutual fund business during February 2016.

Mahindra AMC on 8 April 2016 disclosed that it has started the process of setting up its products and marketing. It will focus on rural and semi-urban markets where its non-bank lender parent Mahindra Finance has a strong presence.

It has filed papers with the SEBI for launching at least four schemes. These schemes are Mahindra MF Bachat Yojana, Mahindra MF Kar Bachat Yojana, Mahindra MF Bal Vikas Yojana and Mahindra Liquid Fund, as per information available with SEBI.

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7) Which domestic bank from April 2016 started first-of-its-kind Aadhaar-based ATM usage facility wherein a customer can transact using his biometric details instead of the PIN? – DCB Bank

Explanation: DCB Bank is a small-sized private scheduled commercial bank with its presence in 17 states and 2 union territories. From April 2016 it started the first ATM in the country which operates using the Aadhaar data.

The user can key-in the 12-digit Aadhaar number or swipe the card at an automated teller machine (ATM) to start a transaction, but at the stage of confirming the identity, it requires biometric details rather than the PIN.

Seeding the bank account with the Aadhaar number will be essential before a customer can use the facility. The solution has been developed in-house and involves connecting up with the Aadhaar server to authenticate the identity of the customer every time a transaction is initiated.

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8) By starting its operations from 25 March 2016, which stock exchange became the newest stock exchange in Asia? – Yangon Stock Exchange (Myanmar)

Explanation: The Yangon Stock Exchange (YSE) started its operations from 25 March 2016 with First Myanmar Investment (FMI), one of Myanmar’s largest companies, becoming the first company to launch an initial public offering (IPO) at the exchange.

The YSE was founded during October 2015 as a joint venture with the state-owned Myanma Economic Bank and two Japanese entities.

There has been no stock exchange in Myanmar for last 50 years. Country’s economy was devastated by nearly 50 years of economic mismanagement under the military government, which ended direct rule of the country in 2011.

The outgoing semi-civilian government that replaced the junta ushered in numerous economic reforms. One of them was to establish the Yangon Stock Exchange (YSE).

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9) Prime Minister Narendra Modi on 14 April 2016 launched an online portal for trading in agriculture produce that is expected to liberate farmers from the clutches of middle-men and realise fair market value for their yields. What is the name of this portal? – National Agriculture Market portal (e-NAM)

Explanation: The idea behind the online portal (e-NAM) is to provide transparency in pricing by removing the information asymmetry between sellers and buyers and enable farmers to benefit from price discovery.

The farmers can list the items they want to sell on the portal. Local traders, as well as traders in other States, can then bid for the produce. The farmer will be free to choose to accept the offer made locally or by traders in other States.

The e-NAM marketplace will initially enable farmers in eight States – Uttar Pradesh, Madhya Pradesh, Jharkhand, Himachal Pradesh, Gujarat, Telangana, Rajasthan and Haryana – to sell 25 commodities in 21 wholesale mandis.

The commodities that will initially be sold online include chana (black gram), castor seed, paddy, wheat, maize, turmeric, onion, mustard, mahua flower, tamarind and shelling pea.

The Agriculture Ministry has targeted integrating all 585 regulated markets on the e-NAM platform by March 2018. Of these, 200 will be on board by September 2016, 200 more by March 2017, and the other 185 markets by the end date.

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10) Which state during April 2016 became the first in India to have passed a landmark legislation providing statutory backing to land records, effectively guaranteeing land and property ownership? – Rajasthan

Explanation: The Vasundhara Raje-led Rajasthan Govt created history of sorts as it passed the Rajasthan Urban Land (Certification Of Titles) Bill, 2016 in the state assembly through a voice vote on 4 April 2016. With this Rajasthan became the first state in India to pass a landmark land titling law.

It is worth mentioning that in India the only proof of land ownership is a proof of a transaction between a buyer and a seller or property tax receipts. All these can be legally challenged, and usually are, holding up both industrial and development projects, from hardware parks to low-cost housing.

The certified title provided under the newly passed Rajasthan act would provide clear title over a chain of documents and enable hassle free transactions of urban lands. This will lead to transparency and will create a sense of confidence among land owners. Disputes and frauds in land deals will be brought to a stop through its implementation.

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