Banking and Financial Awareness – 94

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06 Jul, 2015

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Mudra-Card-Corporation-Bank-2015

1) Which bank on 4 July 2015 became the first in the country to launch the MUDRA Card, under the Pradhan Mantri MUDRA Yojana (PMMY) scheme? – Corporation Bank

Explanation: The MUDRA (Micro Units Development and Refinance Agency) card under the Pradhan Mantri MUDRA Yojana (PMMY) scheme was launched by the Corporation Bank on 4 July 2015 and the bank thus became the first in the country to do so. The card facilitates the withdrawal and use of the working capital finance by micro entrepreneurs. Three loan schemes are offered to the entrepreneurs under MUDRA based on their capacity to repay. “Shishu” scheme provides loan up to Rs.50,000, while a loan amount up to Rs. 5 lakh will be lent under “Kishore” scheme. Under “Tarun” scheme loan up to Rs. 10 lakh will be offered.

 


NPAs-April-2015

2) What is the percentage of gross non-performing assets (gross NPA) for public-sector banks as on 31 March 2015 as reported in the recently held annual review meeting of the Union Finance Minister with the CEOs of banks, insurance companies and financial institutions (FIs)? – 5.17%

Explanation: It was reported that the public-sector banks continue to report higher bad loans and the gross non-performing assets as on 31 March 2015, stood at 5.17%. The stressed assets ratio (which includes NPAs and restructured loans) was 13.2%. The rise was due to some infrastructure projects, slowdown in global economic recovery, and continuing uncertainty in global markets leading to lower growth of credit.

Other important points that came out of this annual review:

The gross non-performing assets (GNPA) of 26 public sector banks (including 19 nationalised banks, State Bank of India and its associates and IDBI) have risen by 22.5% to Rs.2.78 lakh crore against Rs.2.27 lakh crore in the previous financial year.

While the 19 nationalised banks have registered a rise of 39.8% in gross NPA at Rs.1,92,270 crore against Rs.1,37,487 crore in the previous financial year, State Bank of India and its associates have reported eight per cent drop in their NPAs at Rs.73,508 crore against Rs.79,818 crore.

The gross NPAs of new private sector banks — consisting of Axis Bank, DCB Bank (Development Credit Bank), HDFC Bank, ICICI Bank, Kotak Mahindra Bank and Yes Bank, has risen by 35.3% to Rs.24,534 crore in 2014-15 from Rs.18,133 crore in the previous financial year.

Among the new private sector banks, ICICI Bank, with 43.7% rise in gross NPA at Rs.15,095 crore against Rs.10,506 crore, contributes to the maximum followed by DCB Bank (Development Credit Bank) at 33.8% (the increase is on a lower base).

The gross NPAs of eight old private sector banks (listed on stock exchanges) and Tamilnad Mercantile Bank put together shows a rise of 50% at Rs.7,755 crore against Rs.5,170 crore in 2013-14.

Among the eight old private sector banks, Jammu & Kashmir Bank tops the list with a sharp rise of 253% at Rs.2,764 crore against only Rs.783 crore, followed by Karur Vysya Bank with 143% rise at Rs.678 crore (Rs.279 crore) and South Indian Bank (48.5%). Tamilnad Mercantile Bank has shown a reduction in NPA to 318.68 crore from Rs. 428 crore. Lakshmi Vilas Bank has reduced its NPA significantly to Rs.455 crore from Rs.546 crore, followed by Federal Bank to Rs.1,058 crore from Rs.1,087 crore.

 


AIIB-2015

3) The signing ceremony of the Asian Infrastructure Investment Bank (AIIB) took place at the Great Hall of the People in Beijing on 29 June 2015. 50 founding members of AIIB, including India, signed on the articles of AIIB that determine each country’s share and the lender’s initial capital. What is India’s stake in AIIB? – 8.52%

Explanation: The AIIB is expected to focus on infrastructure development in Asia, and unlike the existing International Monetary Fund (IMF) and World Bank, is unlikely to restrict lending on political considerations. The bank will have its headquarters in Beijing. India is its second largest shareholder with a stake of 8.52% and voting share of 7.5%. The voting shares are based on the size of each member country’s economy and not contribution to the Bank’s authorised capital. China’s shareholding is 30.34% and it has retained 26.06% of the voting rights with veto powers for certain key decisions. Some prominent countries, which are members of AIIB include – Australia, Bangladesh, Brazil, Cambodia, Finland, France, Germany, Italy, Jordan, Nepal, Netherlands, New Zealand, Norway, Pakistan, Portugal, Republic of Korea, Russia, Saudi Arabia, Singapore, Spain, Sri Lanka, Sweden, Switzerland, and the U.K.

 

 


4) What is the name of the online forex platform launched by State Bank of India (SBI) on 19 June 2015 that enables customers to book their foreign exchange transactions online? – SBI eforex

Explanation: eforex is the name given to the Internet-based forex (foreign exchange) platform launched by the SBI that facilitates the customers of the bank to obtain forex rates without having to physically visit the branch and enable customers to book their foreign exchange transactions online. SBI eforex is also an innovative platform incorporating robust security features and is designed to be user-friendly, fast and convenient. It is a highly flexible product offering the facility to the customers to customise and set their own limits for deal size, daily transaction limits etc.

 


5) In an unprecedented event, the Reserve Bank of India (RBI) remained opened on 1 July 2015 so as to facilitate settlement of public and market transactions. Normally, RBI remains closed for public transactions on every year’s 1 July. Why? – Because RBI has its annual closing of accounts on this day

Explanation: It is worth mentioning that while April to March is the accounting year for almost whole business fraternity in India, RBI’s accounting year is from July to June. Hence, till date RBI used to remain close for public transactions on 1 July. But moving away from the tradition, the RBI remained opened for public on 1 July 2015 and continued to provide services such as RTGS/NEFT, transfer of funds and settlement of securities, etc. to the general public.

 


Greek-Crisis-2015

6) Greek banks went into a bank holiday from 29 June 2015 after talks between Greece and the European Union (EU) and other creditors failed to reach any conclusion. What is the main reason for Greek Government imposing this bank holiday? – Because the European Central Bank (ECB) announced it would turn off emergency lending to Greek banks

Explanation: The failure to reach a deal with creditors leaves Greece set to default on 1.6 billion euros of loans from the International Monetary Fund (IMF) that fall due on 30 June 2015. It is worth mentioning that the (ECB) has been providing the so-called Emergency Liquidity Assistance (ELA) to Greek banks. The ECB maintained that it will maintain its ELA to Greece at current levels. But without an increase in the ELA, Greece will likely run out of cash before 5 July 2015. Greek Prime Minister has announced to call a referendum on 5 July on a proposed bailout package from the EU. And since Greeks have been withdrawing money in heavy amounts from banks, the Greek govt. announced a bank holiday effective from 29 June. A bank holiday involves closing banks thereby limiting the ability for funds to be withdrawn. It is typically implemented to avoid a bank run. Under the bank holiday, all Greek banks were closed and the stock markets shut for a week, and there will be a daily 60 euro limit on cash withdrawals from cash machines. The holiday will end on 6 July 2015.

 


7) Country’s largest bank State Bank of India (SBI) on 30 June 2015 announced its tie-up with which travel company with an objective to capitalise on the business opportunities of the booming e-commerce and m-commerce ecosystem? – MakeMyTrip.com

Explanation: The partnership between SBI and MakeMyTrip.com includes partnership with personal banking unit for consumer facing propositions – including EMIs on purchase of holidays & international travel, customized travel products like Forex cards and travel products that inspire SBI customers to travel. On the other hand MakeMyTrip customers will be able to access special offers from SBI on debit/credit cards and personal financing. SBI chairperson Arundhati Bhattacharya said that “SBI aims at becoming a “One Stop” solution provider for the entire range of financial needs of e-Commerce players as well as our customers in the market.”


Zimbabwe-Inflation-2015

8) Which African country is on its way to legally end its virtually worthless local currency which has witnessed hyper-inflation as high as 500 billion per cent in the recent times? – Zimbabwe

Explanation: Zimbabwe has decided to end the local currency (Zimbabwean Dollar) by September 2015. This process started from 15 June 2015 bank accounts with balances of up to 175 quadrillion Zimbabwean dollars to be paid just US$ 5 in the exchange. This is due to the fact that the Zimbabwean dollar has become almost worthless. It is worth mentioning that at the height of Zimbabwe’s economic crisis in 2008, Zimbabweans had to carry plastic bags bulging with bank notes to buy basic goods like bread and milk. Prices were rising at least twice a day. According to the Reserve Bank Zimbabwe (RBZ), the customers who held Zimbabwean dollar accounts before March 2009 can approach their banks to convert their Zimbabwean dollar balance into dollars. The process will legally end the local currency. Zimbabweans have until September 2015 to turn in their old bank notes. Customers who still have stashes of old Zimbabwean dollar notes can walk into any bank and get $1 for every 250 trillion they hold.


9) An annual report by the Boston Consulting Group (BCG) concluded that Asia has overtaken Europe as the world’s second-richest region in the world. The report concluded that The Asia Pacific, excluding Japan, held $47 trillion (£30tn) in private wealth during 2014 to overtake Europe. Which region still remains world’s richest region according to the report? – North America

Explanation: North America is the world’s richest region with $51 trillion, but is expected to be surpassed by Asia in 2016. Asia is also projected to hold 34% of global wealth in 2019. Overall, global private financial wealth grew by nearly 12% last year to $164 trillion, lifted by strong gains in the stock and bond markets. The BCG report concluded that as in both 2012 and 2013, Asia-Pacific (excluding Japan) remained the fastest-growing region in 2014. By contrast, growth rates in all ‘old world’ regions remained in the single digits, led by Western Europe and North America, and with Japan lagging somewhat behind.


 


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