Banking and Financial Awareness – 83

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22 Feb, 2015

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1) The Union Govt. on 20 February 2015 notified rules to implement the decision to increase foreign direct investment limit in the insurance sector to 49%. What is the name of the bill associated with this subject that will be presented in the Budget session of Parliament? – The Indian Insurance Companies (Foreign Investment) Rules 2015

Explanation: The Indian Insurance Companies (Foreign Investment) Rules Bill allows up to 26% foreign investment through the automatic route, while foreign partners can increase their stake beyond that limit up to 49% with the approval of the Foreign Investment Promotion Board (FIPB). The rules will also apply to insurance brokers, third party administrators, surveyors and loss assessors, and other insurance intermediaries appointed under the provisions of the IRDA Act, 1999. Any increase of foreign investment of an Indian insurance company will have to be in accordance with the pricing guidelines specified by the RBI under the FEMA rules. With this bill, Union Govt. seeks to replace The Insurance Laws (Amendment) Ordinance, 2014, that was promulgated by the President of India, in December 2014.


2) The State Bank of India has recently launched a massive initiative to empower its customers through technology and awareness. Under this initiative special SBI centers across the length and breadth of the country have started holding interactive learning sessions and demos of the bank’s tech-channels. What is the name of these special centers? – Tech Learning Centres (TLCs)

Explanation: This initiative has been on since December 2014. Under this 385 State Bank TLCs across the length and breadth of the country have started holding interactive learning sessions and demos of the bank’s tech-channels for over ten thousand customers every month. A large number of customers are having an initial fear and hesitation to use technology for their banking needs. But through this initiative SBI seeks to remove such hesitation among them.  After launching in December, 2014, more than 30,000 customers were trained in these TLCs. TLCs will spread awareness of the Bank’s various tech channels including Cash Deposit Machines, Mobile Banking apps, Net Banking and Green Remit Cards, in addition to providing guidance on how to use these channels safely and in a secure manner.


3) The “Halwa Ceremony”, which was held on 19 February 2015, is associated with which keenly awaited event of the Union Govt.? – “Union Budget”

Explanation: The process of printing documents for the Budget starts with the ritual called “Halwa Ceremony”. It has been a tradition which has continued for long. As part of the ritual, halwa is prepared in a big-kadhai (cauldron vessel) and served to the staff of the Ministry. The significance of the sweet dish (Halwa) is that after it is served, a large number of officials and support staff, who are directly associated with budget making and printing process, are required to stay in the Ministry and remain cut off from their families till the presentation of the budget by the Minister. They are not even allowed to contact their near and dear ones through phone or any other form of communication, like email. Only very senior officials in the Finance Ministry are permitted to go home. The “Halwa Ceremony” was held in North Block and was attended by Finance Minister Arun Jaitley.


4) National Payments Corporation of India (NPCI), the umbrella organisation for retail payment system in India, on 18 February 2015 launched a unified platform for providing a single payment interface across all systems. What is the name of this interface that will enable all account holders to send and receive money from their smartphones with a single identifier? – Unified Payment Interface (UPI)

Explanation: The UPI will make possible paying and receiving payments as easy as swiping a phone book entry and making a call on mobile phone. Anyone who has an account should be able to send and receive money from their mobile phone with just an identifier without having any other bank/account details. It is designed to enable all account holders to send and receive money from their smartphones with a single identifier – Aadhaar number, mobile number, virtual payments address – without entering any bank account information. UPI will make payments possible only by providing an address with others without having ever provided account details or credentials on 3rd party applications or websites.


5) Which private bank on 16 February 2015 announced plans to launch India’s first Green Infrastructure Bond worth Rs. 500 crore, proceeds from which will be deployed to fund renewable energy and energy efficiency projects? – Yes Bank

Explanation: This proposed Green Infrastructure Bond is claimed to be the first such issue in the country and the money will be used to fund solar power, wind power, biomass, and small hydel projects. The bond will have a tenor of ten years. Yes Bank also claimed that globally, a sum of US$ 35 billion was raised by issuing such green bonds in 2014, while the market in the country is either non-existent or nascent. Yes Bank at present is the 4th largest private bank in the country.


6) The State Bank of India (SBI) made how much commitment for clean energy generation (renewable energy) as announced by it at Re-Invest India 2015 on 15 February 2015? – Rs. 75,000 crore

Explanation: SBI committed Rs. 75,000 crore for generation of 15,000 MW of renewable energy in the next 5 years. SBI has a loan exposure of Rs. 1.78 lakh crore in the power sector including conventional energy and discoms. Of this the bank’s outstanding loan towards clean energy is to the tune of Rs. 7,500 crore.


7) The Reserve Bank of India (RBI) on 13 February announced it would soon put in circulation currency notes with the denomination of Re 1. When printing of Re. 1 notes was discontinued by the govt. due to higher printing costs? – November 1994

Explanation: RBI announced that Re.1 currency notes are legal tender as provided in The Coinage Act, 2011 and the existing currency notes in this denomination in circulation will also continue to be legal tender. The RBI has been gradually withdrawing lower denomination notes as the perceived benefit is lesser than the cost of printing such notes. However, the move to re-start printing of Re.1 note is being seen as a symbolic gesture as Re 1 coins are expected to be more in circulation. While the RBI has the authority to issue bank notes of denominational values of Rs. 2, Rs. 5, Rs. 10, Rs. 20, Rs. 50, Rs. 100, Rs. 500, Rs. 1,000, Rs. 5,000 and Rs. 10,000, the one rupee note is printed and issued by the central government.


8) The Corporate Affairs Ministry during February 2015 removed curbs on acquisition of shares and other securities that was imposed on banking, insurance and housing finance companies. This exemption was earlier available to these entities. The said curb was imposed under which act? – The new company law (Companies Act, 2013)

Explanation: The new company law had placed restrictions on banking, insurance and housing finance companies as far as acquisition of securities and shares was concerned. Prior to this these entities were required to follow compliance requirements including shareholders’ approval in some cases whenever they acquired shares or any other securities. Now the Corporate Affairs Ministry has placed banking companies, private insurers and housing finance companies in the same footing as was the situation under the erstwhile Companies Act 1956.  The latest corporate affairs ministry move is being counted as step towards ease of doing business in India. However, the latest relief will not cover most public sector banks as they are governed under a separate law and restrictions on investments under the company law did not apply to them. Currently, there are only two banks – IDBI Bank and Bharatiya Mahila Bank (BMB) – that are registered as companies under the new company law.


9) The Reserve Bank of India (RBI) on 18 February 2015 allowed banks to lend against gold and thus lifted the ban on the same. When was this ban imposed? – June 2013

Explanation: Apart from listing the ban on lending against gold, the RBI also allowed banks to import gold on a “consignment basis”, under which they act as intermediaries and don’t pay for the stock until a buyer has been found, which is usually quickly. On the other hand trading houses will be allowed to bring in gold with no conditions attached. Gold flows into the country have slowed despite the removal in November 2014 of the so-called 80-20 rule that required importing agencies to re-export a fifth of total imports, as importers and customs officials waited for more clarity. Imports had dropped despite the reversal of the rule as the industry was taken aback by the sudden change in the central bank’s position and banks remained wary, fearing customs officials would hold up incoming shipments.


10) What is the period of loan extension that was given to Greek government by the finance ministers of euro zone on 20 February 2015 to avert a potential crash crunch in March 2015? – 4 months

Explanation: The agreement, clinched after the third ministerial meeting of euro zone finance ministers held at Brussels offers a breathing space for the new Greek government to try to negotiate longer-term debt relief with its official creditors. This loan extension ends weeks of uncertainty since the election of a leftist-led government in Greece which pledged to reverse austerity measures that were imposed on Greek as conditions of the bail-out package given to it in 2010.


 


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