Banking and Financial Awareness – 91

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26 May, 2015

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KV-Kamath-NDB-2015

1) Which noted banker of India was on 11 May 2015 appointed as the first President of the $100-billion New Development Bank (NDB) of the BRICS countries, to be based in China’s financial hub Shanghai? – KV Kamath

Explanation: KV Kamath is one of India’s most well-known bankers. He retired as Managing Director and CEO of ICICI bank in April 2009, and took up his current position as non-executive chairman. 5 BRICS countries – Brazil, Russia, India, China and South Africa – had agreed to set up the $100 billion development bank last July, in a step toward reshaping the Western-dominated international financial system. The name of the bank – the New Development Bank – was suggested by Prime Minster Narendra Modi at a meeting of member countries in Fortaleza, Brazil in November 2014. It was also agreed that the New Development Bank (NDB), which will fund infrastructure projects in developing nations, would be based in Shanghai. It would be headed by an Indian for a first five-year term, followed by a Brazilian and then a Russian.

 


Credit-Card-2015

2) The credit-card base in India, at the end of 2014, crossed which level of year 2010, which is often described as the pre-crisis level in banking parlance? – 20 million

Explanation: According to the data released by the Reserve Bank of India (RBI), the number of outstanding credit cards at the end of December was 20.29 million. This was the first time that the total number of credit cards in India has crossed 20 million mark since February 2010. The period after 2010 is generally assumed as the crisis period for Indian credit card industry when number of cards swelled despite payment incapability of numerous card holders. Banking experts believe that rise in e-commerce and improved infrastructure in the banking system, leading to easy acceptance of cards, have helped in growth of credit cards. RBI data also suggests it is not just the number of cards in the system but even the spends on these cards have gone up significantly. At the end of December 2011, the spends on credit cards stood at Rs. 8,532.6 crore, which has more than doubled to Rs. 17,437.1 crore by the end of December 2014.

 


3) Mangaluru-headquartered Corporation Bank recently dropped plans to take over the assets and liabilities of a Maharashtra-based cooperative bank whose license was cancelled by the RBI in 2013. Which bank is this? – Rupee Co-operative Bank Limited

Explanation: Rupee Co-operative Bank Limited is based in Pune (Maharashtra). It is over 100 year old and is one of India’s oldest cooperative banks. The bank operates 36 branches across Maharashtra, and has accumulated losses of Rs. 652 crore. Due to increasing bad loans, the RBI had suspended the license of the Rupee Co-operative Bank and had imposed severe monetary strictures in 2013. Since the imposition of the moratorium, talks for merger with other banks have been on. Corporation Bank had evinced interest in merging the operations of Rupee Co-operative Bank with it and had asked for various reports from the bank to assess its financial health. Corporation Bank was the most serious among the prospective suitors for the bank in the two years since it was put under a Reserve Bank of India (RBI)-appointed administrator. But now Corporation Bank has dropped plans to acquire Rupee Co-operative Bank. The latest development will affect over 6.30 lakh depositors of Rupee Bank, bringing upon the beleaguered bank the spectre of going into liquidation unless another suitor or some method of reviving bank’s interest is found.

 


4) Private-sector Federal Bank on 18 May 2015 forayed into credit card segment with the launch of a co-branded credit card. It has tied up with which PSU bank for this co-branded credit card? – SBI

Explanation: This is for the first time that Federal Bank has entered into credit card segment. In the first year, the bank aims to issue as many as 1.5 lakh credit cards to its customers. Initially, two variants-Platinum and Gold’ N More-will be issued under the Visa platform for a specified fee. Federal Bank is among the largest Indian private sector banks and is headquartered in Aluva, Koch (Kerala). It had over 1200 branches and over 1400 ATMs all over India at the end of October 2014.


 

 

5) From May 2015 National Payments Corporation of India (NPCI) has reduced the switching fee it charges banks for processing inter-bank ATM transactions by five paise. What is the new switching fee after this reduction? – 45 paise per transaction

Explanation: Till now NPCI’s switching fee for processing inter-bank ATM transactions was 50 paise per transaction, which stood since four years when NPCI had cut the switching fee to 50 paise from Rs. 1 through its National Financial Switch in 2011. The reduction in switching fee came on the back of ATM transaction volumes rising to about 27 crore a month from eight crore five years back. Currently, each time a customer of a particular bank withdraws cash at the ATM of another bank, the former bank has to pay the later a transaction fee of Rs. 20. Further, the first bank has to pay NPCI a switching fee of Rs. 0.45.


6) The Finance Ministry on 19 May 2015 put up draft of the ambitious Gold Monetisation Scheme which aims to bring out around 20,000 tonnes of gold lying idle with households. Based on the views of the public and stakeholders, the new scheme will be finalised and made operational. What will be the main benefit of this scheme? – The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account

Explanation: The new Gold Monetisation Scheme (GMS) was announced in the Union Budget 2015-16 with the aim of replacing both the present Gold Deposit and Gold Metal Loan Schemes. The new scheme will allow the depositors of gold to earn interest in their metal accounts and the jewellers to obtain loans in their metal account. Banks/other dealers would also be able to monetise this gold. The minimum quantity of gold that a customer can bring in proposed to be set at 30 grams, so that even small depositors are encouraged. Gold can be in any form (bullion or jewellery) and the scheme will give interest as well as tax benefits. The depositors will have the option to take cash or physical gold at the time of maturity. Minimum tenure of such account will be one year with an option of rolling over in multiples of one year. Earlier, one Gold Deposit scheme was introduced in 1999 with an aim to mobilise the idle gold in the country and put it into productive use. However, it has not been very successful and less than 10 tonnes of gold has been collected.


 

7) What was the fiscal deficit (estimated) for 2014-15 as announced by the Union Finance Ministry on 17 May 2015? – 4% of the GDP

Explanation: The Union Finance Ministry announced that it was able to contain the fiscal deficit for 2014-15 at 4% of GDP against 4.1% set to be achieved in the Union Budget. Similarly the revenue deficit was estimated at 2.8% of the as against the revised estimate of 2.9% of GDP, marking a sharp improvement over 3.2% for 2013-14. The Narendra Modi-led NDA government had adopted the fiscal deficit target set by the UPA government in its interim budget for 2014-15 even as it pointed out that it would be a ‘challenge’ to meet the target. The government has budgeted a fiscal deficit of 3.9% of GDP in the current fiscal (2015-16). Fiscal deficit is the gap between the government’s expenditure and revenue for a stipulated period. On the other hand revenue deficit refers to the shortfall in total government revenue realization from the targeted figure.


8) The Companies (Amendment) Bill, 2014 was passed by the Rajya Sabha on 13 May. How many amendments in total were affected in the Companies Act of 2013 through this amendment bill? – Sixteen

Explanation: The Lok Sabha had passed the Companies (Amendment) Bill, 2014, in December last year and with the bill being passed by the Rajya Sabha, a total of sixteen amendments were made to the Companies Act of 2013. The amendments to the Companies Act, 2013, which came into effect from 1 April 2015, are designed to address some issues raised by stakeholders. The amendments include winding up of companies, board resolutions, bail provisions and utilisation of unclaimed dividends, protecting confidentiality of board resolutions, the provision of auditors being required to report suspected frauds, etc.


 

9) In a setback to the Narendra Modi govt., which global financial entity on 13 May 2015 downgraded India to “underweight” category, which was the first major downgrade for the India in the past one year? – HSBC

Explanation: Global brokerage house HSBC downgraded India by changing its stance on the country to “underweight”. In doing so it cited projections for weak monsoon, muted corporate earnings, and odds against further rate cuts. It also said India has become the second most expensive and one of the most over-owned markets in Asia, after a strong rally on the back of reform optimism generated by the Modi government over the past one year. The downgrade came at a time when Indian markets are already under acute pressure, primarily because of foreign investors turning heavy sellers on concerns related to the controversial MAT levy and delay in the ambitious indirect tax (GST) and land reforms.


10) A new set of insider trading norms came into effect from 15 May 2015 with the aim to tackle insider trading menace in Indian capital markets. The Securities and Exchange Board of India (SEBI) had imposed the old regulations on insider trading in which year? – 1992

Explanation: Indian capital markets were run by over two decade old insider trading norms that were imposed by the SEBI in 1992. It is worth mentioning that the SEBI had notified the new regulations (Prohibition of Insider Trading Regulations, 2015) on insider trading in January 2015. These norms came into force from 15 May 2015. The new norms, which revamped the 1992 norms, are also expected to ensure that genuine trades are not impacted. The tightening of norms assumes significance in the wake of SEBI coming across cases of insider trading not just at small companies but at big corporates as well. Under the new framework, the definition of ‘Insider’ has been expanded to include persons connected on the basis of being in any contractual, fiduciary or employment relationship that allows such people access to unpublished price sensitive information (UPSI). The broader definition of ‘insider’ will also bring into its ambit persons who may not seemingly occupy any position in a company, but are in regular touch with the company and its officers who are involved in the operations.


 


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