Banking and Financial Awareness – 98

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24 Aug, 2015

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Indradhanush-2015

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1) What is the name of the 7-pronged strategy announced by the Union Finance Ministry on 14 August 2015 that aims for comprehensive revamp of public sector banks of the country? – “Indradhanush”

Explanation: The 7-pronged strategy rolled out to comprehensively revamp the functioning of PSU banks in the country has been termed as “Indradhanush” (rainbow). It includes streamlining of appointments, setting up of a Bank Board Bureau (BBB) to scout for heads of PSBs, recapitalisation measures and facilitating easing of non-performing assets (NPAs) to help ensure improved credit. The seven broad heads of the strategy are appointments, establishment of a Bank Board Bureau (BBB) to scout for heads of PSBs, recapitalisation measures and facilitating easing of non-performing assets (NPAs) to help ensure improved credit. Under “Indradhanush” strategy, a holding company -bank investment committee – would be set up to own shares in state-owned banks on behalf of the government. This would be preceded by the setting up of a BBB, some of whose functions would be subsumed under the proposed holding company. With this, most recommendations of the P.J. Naik Committee have been accepted by the government. However, its suggestion to cut government stake in these banks below 50% has been turned down.


SBI-Buddy-App-2015

2) What is the name of the m-wallet (mobile wallet) application of State Bank of India (SBI) that was launched by Finance Minister Arun Jaitley on 18 August 2015? – SBI Buddy

Explanation: SBI Buddy is the m-wallet app of India’s largest banking entity SBI that was launched on 18 August 2015. M-wallets are similar to savings bank accounts that can be accessed through mobile phones. SBI Buddy app can be used to send money to new and registered customers, book for movies, flights, hotels as well as for shopping.It also has features like reminders to settle dues, recharge and pay bills instantly. It can be accessed in 13 different Indian languages and has been launched in collaboration with Accenture and MasterCard. With launch of SBI Buddy, SBI will compete directly with ICICI Bank’s Pocket, HDFC Bank’s PayZapp and Paytm, a market-place-cum payments’ company. This move will help SBI to enter the rapidly growing mobile wallet business. It will also restrict the abilities of several online market places which are looking to erect barriers through the ‘app only’ sale.

Banking – SBI Buddy


Startup-India-20153) Prime Minister Narendra Modi announced a new campaign “Start-up India, Stand up India” during his Independence Day Address on the occasion of India’s 69thIndependence Day on 15 August 2015. “Start-up India, Stand up India” is associated with which issue? – Promoting banks to finance start-ups and offer incentives to boost entrepreneurship and job creation

Explanation:“Start-up India, Stand up India” was the main theme of PM’s Independence Day address from the ramparts of the historic Red Fort on 15 August. According to the PM, the initiative will encourage entrepreneurship among the youth of India. Each of the 1.25 lakh bank branches in the country would encourage at least one Dalit or tribal entrepreneur and at least one woman entrepreneur. Under this, in addition to existing systems to facilitate start-ups, loans would also be given to help people. “Start-up India, Stand up India” is expected to give a new dimension to entrepreneurship and help set up a network of start-ups in the country.

Banking Awareness – Start Up India, Stand Up India.


4) The Reserve Bank of India (RBI) on 13 August 2015 paid a dividend of nearly Rs. 66,000 crore to the government. This was the highest ever dividend paid by the RBI in its 80-year history. What are the main sources of RBI’s income? – Interest from Repo operations, coupon payments for holding govt. securities and interest incomes on its holdings of sovereign bonds

Explanation: It is worth mentioning that the three main sources of income of the RBI are the coupon payments it gets on its holding of government securities, the interest it receives from banks (which borrow money from it or RBI’s repo operations) and also interest incomes on its holdings of sovereign bonds like US Treasury bills. Every year, after meeting its expenses and keeping aside part of its total profits, the RBI transfers a substantial amount to the central government exchequer. This year’s dividend of over Rs. 66,000 crore is 22% more than it paid last year. On a point to point basis, RBI’s dividend payment to the government is up more than four times in as many years. This huge dividend payout is expected to ease the government’s finances, help meet its fiscal deficit targets, provide liquidity to the system so that the rate of interest remains low and also makes available funds for the government’s capital expenditure, economists and bond dealers said.

Banking – Reserve Bank of India (RBI)


smart-vault-ICICI-Bank

5) What is the name of the first of its kind fully automated digital locker launched by ICICI Bank on 18 August 2015? – ‘Smart Vault’

Explanation: ICICI Bank’s ‘Smart Vault’ is a unique locker service which would be available to customers even on weekends and post banking hours. This locker is equipped with multi-layer security system, including biometric and PIN authentication and debit cards, among others. Customers can access it without any intervention by the branch staff. ‘Smart Vault’ uses robotic technology to access the lockers from the safe vault and enables customers to access their lockers at any time of their preference.

ICICI Bank -Banking Awareness


6) In a landmark development for country’s banking sector, the Union Government on 14 August 2015 announced appointment of two executives from the private sector to head public sector banks (PSU banks). The move is part of a strategy to professionalize bank boards and improve the performance of government-controlled banks that account for 70% of the deposits and loans extended by banks. Who are these two executives? – PS Jayakumar (Bank of Baroda) and Rakesh Sharma (Canara Bank)

Explanation: The Finance Ministry on 14 August announced an overhaul of public sector banks. It signaled that the government would not frown upon mergers and acquisitions in the public sector space. Apart from this, it, for the first time since bank nationalization in 1969, drafted executives from the private sector to run two public sector banks. These two executives are – PS Jayakumar (Bank of Baroda) and Rakesh Sharma (Canara Bank), both of whom are from private sector. The reform measures have been in the works for a year. It began soon after the arrest of Syndicate Bank chairman and MD SK Jain on corruption charges during August 2014 and comes at a time when lenders are reporting steep fall in profits due to mounting non-performing loans. The process included PM Narendra Modi holding a first of its kind interaction with bank chiefs, which was followed up by individual presentation by 22 banks to the Finance Ministry.

Banking Awareness PSU Banks


IRDA-2015

7) The Insurance Regulatory and Development Authority of India (IRDA) on 13 August 2015 announced what important policy change for Indian banks? – It allowed banks to tie up with up to 9 insurance companies under the policy of open architecture Bancassurance policy

Explanation:As part of the new Bancassurance guidelines, the IRDA on 13 August 2015 allowed banks to tie up with a maximum of nine insurers from three segments- life, non–life and standalone health insurers. While such a tie-up will not be mandatory on the banks and it has been left to them to take a call on the number of tie-ups. Till now banks were not allowed to have insurance agency tie-ups with more than one insurer. Bancassurance is the system of selling of insurance policies through a bank, wherein bank acts as an insurance agent. Thus banks generate income additional revenue and profits from this alternative activity. It is worth mentioning that the IRDA has been making efforts to launch a policy of open architecture bancassurance policy but was unable to finalise the broad features of the new policy as they were not agreed by the various stake holders of the insurance industry.

Insurance – IRDA


8) China’s currency Yuan’s value was devalued to its lowest rate against the US dollar in almost three years by China’s central bank on 11 August 2015. A day later China further lowered its “daily fix” of the Yuan. What is the primary objective of this depreciation? – To make Yuan’s exchange rate more market-oriented and make Chinese exports cheaper

Explanation: The People’s Bank of China (POBC) on 11 August devalued the Yuan by 1.9% against the US dollar. Later on 12 August POBC further lowered its “daily fix” of the Yuan to 6.3306 per US dollar, a further decline of 1.6%. The move is primarily aimed at making the exchange rate of Yuan more market-oriented. The move also came just after weak economic data was released by China, which is world’s second largest economy. It is worth mentioning that the United States has in the past complained that China uses its currency for competitive advantage. Just a few days back China reported a sharp fall in exports and a slide in producer prices to a near six-year low in July 2015. Exports fell by 8.3% in July, far worse than expected and the producer price index was down 5.4% from a year earlier. China has long kept tight control of the value of Yuan on concerns over financial volatility and losing its policy control. With this, international markets became rife with rumours about China wanting to exacerbate a currency war.


9) State Bank of India’s net profits for the first quarter of 2015-16 was announced on 11 August 2015. How much was it? – Rs. 3,692 crore

Explanation: The net profits of India’s largest commercial bank SBI for quarter ended June 2015 stood at Rs. 3,692 crore, up from Rs. 3,349 crore in the same year-ago period, thus registering an increase of 10.2%. Gross bad loans as a percentage of total loans marginally rose to 4.29% from 4.25% in the previous quarter but were lower than 4.9% reported a year earlier.

Banking -State Bank of India (SBI)


SIDBI-2015

10) Small Industries Development Bank of India (SIDBI) on 18 August 2015 launched two new funds primarily for small entrepreneurs and start-ups. What are the names of these funds? – India Aspiration Fund (IAF) and SIDBI Make In India Loan For Enterprises (SMILE)

Explanation: The two funds were launched by Union Finance Minister Arun Jaitley. The total corpus for India Aspiration Fund (IAF) is Rs. 2,000 crore while the corpus for SMILE fund is Rs. 10,000 crore. Life Insurance Corporation (LIC) will be a partner and a co-investor in these funds. IAF is expected to catalyse tens of thousands of crores of equity investment in start-ups and MSMEs. On the other hand, the idea behind the launch of SMILE scheme is to provide soft loans in the nature of quasi-equity and term loans on relatively soft terms to MSMEs to meet the required debt-equity ratio norm as also for pursuing opportunities of growth by existing MSMEs.

Small Banks -Banking Awareness


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