Banking and Financial Awareness – 90

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09 May, 2015

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RBI-2015


 

1) The Reserve Bank of India (RBI) on 7 May 2015 put in place a new framework for banks to check loan frauds. Under this framework early warning signals will be integrated at banks to give quick information about loan frauds being committed. A new concept has been introduced in the current framework as an important step in fraud risk control. What is this new concept? – Red Flagged Account (RFA)

Explanation: The concept of a Red Flagged Account (RFA) is being introduced in the current framework as an important step in fraud risk control. An RFA is one where a suspicion of fraudulent activity is thrown up by the presence of one or more early warning signals (EWS). These signals in a loan account should immediately put the bank on alert regarding a weakness or wrong doing which may ultimately turn out to be fraudulent. No restructuring or grant of additional facilities may be made in the case of RFA or fraud accounts.


2) Which public sector bank launched “Rupay Platinum Debit Card” on 20 April 2015 by tying up with National Payments Corporation of India (NPCI)? – IDBI Bank

Explanation: The “Rupay Platinum Debit Card” fulfils the vision of the RBI of offering a domestic, open-loop, multilateral payment system to all banks and financial institutions in India. All transactions under this card scheme will be processed within the country and will be in compliance with the regulatory requirement for debit cards and the PIN has been made mandatory for performing any kind of transactions. This ensures a higher level of security to the customers. The card enables cost-effective, fast and secure access to large number of ATMs, POS terminals, e-commerce websites and participating merchant-establishments across the country.


3) ICICI Bank on 20 April 2015 launched a new payment service called ‘Tap-n-Pay’ which enables customers make over-the-counter payments without using cash. This first-of-its-kind payment service was launched in collaboration with which IT company? – Tech Mahindra

Explanation: ICICI Bank’s ‘Tap-n-Pay’ payment service is based on the near-field communications (NFC) technology. It can be used for merchant payments by merely tapping a NFC-enabled mobile phone or a tag on the counter. One important feature of this service is that it is a close-end one, only for a close group of customers, like canteen payments at the work place, and not universal like a debit or credit card. Any person having any bank account, and not limited to ICICI customers, can avail the service. For making payments, the user will have to bring the NFC tag or the mobile phone near a device at the merchant’s facility and the amount will automatically get debited from the prepaid account, without keying-in any code.


 

4) According to a latest report of the World Bank, what percentage of India’s bank accounts were lying dormant in 2014? – 43%

Explanation: The World Bank Global Findex for 2014 stated that 43% of adults with bank accounts made no deposits or withdrawals in the past year. It also mentioned that 230 million (people) with accounts paid utility bills and school fees in cash. This meant that significantly higher bank accounts were not being utilized to undertake cashless transactions. It is worth mentioning that nearly every Indian household now has access to a bank account, thanks to a renewed push to financial inclusion under the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY).


5) What is the rate of interest for General Provident Fund (GPF) and other related schemes that has been retained for 2015-16 as notified by the Finance Ministry on 21 April 2015? – 8.7%

Explanation: The 8.7% rate of interest will be effective from 1 April 2015 and will apply on Provident Funds of central government employees, railways and defence forces. The interest rate for GPF is in line with the interest rate fixed for Public Provident Fund (PPF) at 8.7% for 2015-16. The Government had, however, raised the interest rates for other small saving schemes. The interest rate for senior citizens savings scheme was hiked from 9.2% to 9.3% and for Sukanya Samriddhi Account (SSA), the special deposit scheme for girl child, the interest rate has been hiked from 9.1% to 9.2%, respectively. The interest earning for Kisan Vikas Patra (KVP) has been retained at 8.7%.


6) The Central Board of Direct Taxes (CBDT), the apex policy making body of the Income Tax department, notified the new Income Tax Return (ITR) Forms on 17 April 2015. However, seeing the furious backlash against the proposal to seek plethora of details in these forms, the govt. on 18 April decided to put them on hold. What was the additional information sought in these new forms that was apparently criticized by various quarters? – Apart from the usual information, the new forms sought details of all bank accounts held, foreign assets, beneficiaries, foreign travel, expenses incurred and detailed break-up of capital gains

Explanation: With these changes, this was the fifth revamp of the income tax forms in the past five years. The new forms (ITR-1 and ITR-2) were supposed to be used to file returns from July 2015 for the assessment year 2015-16. They sought enhanced disclosure of foreign assets – financial and physical -income generated through foreign assets, and the beneficiaries and beneficial owners of these assets. Govt. expected that higher disclosure of domestic assets will help check undisclosed domestic (benami) assets, which will form a part of the benami property Bill to be introduced by the government. The new forms required an assessee also to furnish the number of bank accounts held by the individual “at any time (including opened/closed) during the previous year” with the last balance in his or her account on March 31 of the just concluded fiscal year. Another controversial disclosure sought was whether one has travelled abroad, as well as the expenses incurred during the travel. It was required to disclose whether the expenses incurred during foreign travel were from a personal account or billed to the company, while on an official trip. However, taxpayers were worried about the extra effort needed to fill in the details and experts believed that it would add to paperwork and harassment. Seeing the backlash, the govt. decided to put the new forms on hold.


7) What was the annual trade deficit for India for year 2014-15, the figures for which were released by the govt. on 17 April 2015? – $137 billion

Explanation: The annual trade deficit for India for fiscal year 2014-15 increased by $1.2 billion to touch $137 billion. The figure stood at $135.8 billion during 2013-14. During 2014-15, India’s merchandise exports declined 1.2% to $310.5 billion, while imports were down 0.6%, at $447.6 billion. On the other hand, India’s trade deficit in March 2015 was the highest in four months, at $11.79 billion. These figures have underscored risks for growth prospects in Indian economy with continuous fall in exports. As far as steep decline in imports is concerned it was mainly due to a plunge in global prices of crude oil, by nearly half since last June.


8) In an important step the Union Govt. made it easier to incorporate a new business from 1 May 2015. Under this initiative, entrepreneurs keen on setting up new enterprises will be able to incorporate their entities by filing just one form as against eight as was the practice till now. Which new form is this? – INC-29

Explanation: This initiative is part of the government’s drive to improve India’s ranking on the globally tracked parameter of ease of doing business. It is worth mentioning that Prime Minister Narendra Modi has made it a personal mission to improve India’s scores on this parameter. The government wants to reduce the time taken to register a company in India to one day. From 1 May 2015, the Ministry of Corporate Affairs made available, an integrated company incorporation form (INC-29) that makes compliance and reporting easier and convenient for corporates. All important procedures associated with incorporation (such as availability, allotment of Director Identification Number (DIN), company incorporation and commencement of business) will be facilitated through this single form. The red tape that businesses faces while registering themselves, including at least 8 different forms for various permissions has been a pet peeve of entrepreneurs in India.


9) According to the latest SEBI data, mutual fund (MF) managers invested a net sum of Rs.7,618 crore in equity segment during April this year, which is the highest monthly net inflow (equity) in more than seven years. This was the best MF equity inflow since which month? – January 2008

Explanation: The net MF inflow of Rs. 7,618 crore recorded in April this year was the highest net inflow in equities since January 2008, when fund managers poured in Rs. 7,703 crore. In comparison, the MF equity inflow during April 2014 was just Rs.2,698 crore. Besides, fund managers invested a net amount of Rs. 28,650 crore in debt markets during April 2015. Experts have attributed this strong inflow in stock markets to positive investor sentiments, government’s reforms agenda, improved fundamentals of the domestic economy, and increased participation from retail investors. Fund managers have shown interest in equity markets in the past one year. They pumped in over Rs. 40,000 crore in equity markets in 2014-15, making it their first net inflow in six years, for an entire fiscal. The huge inflows also helped the MF industry reach around Rs.12 lakh crore-mark in assets under management (AUM) at the end of the financial year.


10) A noted Indian investor and mutual fund entrepreneur passed away during May 2015 after a car accident in the United States. At the time of accident he was going to attend the annual general meeting of Berkshire Hathaway, the company controlled by legendary investor Warren Buffett. Who was this renowned Indian investor? – Parag Parikh

Explanation: Parag Parikh died while the car he was travelling in met with an accident in Omaha, Nebraska. 61-year old Parikh was the founder of Parag Parikh Financial Advisory Services (PPFAS), a mutual fund company with long term investment focus as its vision.


 


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