Banking and Financial Awareness – 116

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25 Oct, 2016

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rbi-bank-license-2016

1) The Reserve Bank of India (RBI) issued its final guidelines pertaining to bank licenses on 1 August 2016. What is the foremost implication of these guidelines? – Universal bank licences will now be available on-tap in India

Explanation: The RBI on 1 August 2016 issued final guidelines allowing non-banking financial companies (NBFCs), qualified individuals and some private companies to apply for a licence as and when they choose to.

The rules, which follow draft guidelines released on 6 May 2016, also prevent the entry of large industrial houses into the banking sector.

Those who will be eligible to apply include NBFCs that are controlled by residents and have a successful track record for at least 10 years. However, NBFCs which are part of larger conglomerates with more than 40% of their total assets coming from non-financial businesses will not be eligible.

In addition, individuals and professionals who are residents and have more than 10 year of banking experience can allow apply.

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2) The State Bank of India on 2 August 2016 launched two new cheaper home loan products – ‘SBI Privilege Home Loan’ and ‘SBI Shaurya Home Loan’. These products are tailor-made for which groups? – Government employees and Defence personnel (respectively)

Explanation: While, ‘SBI Privilege Home Loan’ will serve the home-loan requirements of government employees, ‘SBI Shaurya Home Loan’ has been offered for the defence personnel.

Under the 2 new schemes, employees of central/state governments, defence forces, public sector banks, public sector enterprises of central government and other individuals with pensionable service will be offered home loans tailored to their specific needs. There will be a lower EMI burden post retirement and 0.05% concession over the home loan interest in these schemes whereas no processing charges will apply.

The launch of ‘SBI Privilege Home Loan’ and ‘SBI Shaurya Home Loan’ products is timed with the notification of 7th Pay Commission recommendations. SBI is of the opinion that surplus income can thus be utilised by government employees and defence personnel towards purchase of new/better house.

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3) What is the name of the portal launched by the Reserve Bank of India (RBI) to curb illegal collection of money by companies? – ‘Sachet’

Explanation: ‘Sachet’ is the name given to the newly launched portal of the RBI that will enable public to obtain information regarding entities that accept deposits, lodge complaints and also share information regarding illegal acceptance of deposits.

It was formally launched by RBI Governor Raghuram Rajan on 4 August 2016. Sachet is expected to help regulators taking cases against deterring entities from carrying out unlawful activities and helping members of public in depositing their hard earned money with genuine companies by giving them timely information about them.

The general public can file and track a complaint on this website if any firm has illegally accepted money from them or defaulted in repayment of deposits.

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4) Which private sector entity overtook state-owned Oriental Insurance to become the fourth-largest in terms of gross written premium, as disclosed during August 2016? – ICICI Lombard

Explanation: ICICI Lombard recently overtook state-owned Oriental Insurance to become the fourth-largest in terms of gross written premium. This is the first time after the industry opened up in 2000 that a private insurer has surpassed a PSU counterpart.

ICICI Lombard ended the quarter-ended June 2016 with gross premium of Rs 2,880 crore – an increase of 41% over the previous year and a market share of 11%.

On the other hand Oriental Insurance’s premium during the same period stood at Rs. 2,508 crore. Its market share stood at 9%.

For one and half decades, the top four slots have been consistently held by New India Assurance, which continues to be the market leader, and three other public sector units – National Insurance, United India Insurance and Oriental Insurance.

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less-cash-economy-2016

5) Union Govt. during August 2016 announced which important step to promote less cash economy? – It will bear transaction costs for online payments done to govt.

Explanation: In order to promote less cash economy, the government announced it will bear the transaction cost for all payments made to it through debit or credit cards and net banking.

The Finance Ministry during August 2016 issued the circular in pursuance of the decision of the government to promote credit/digital transactions in government payments and collections.

Earlier the government had set up a task force under Department of Investment and Public Asset Management (DIPAM) Secretary Neeraj Gupta, which had recommended waiving such transaction costs.

At present, customers bear the transaction cost commonly known as merchant discount rate (MDR) on payments made to the government.

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6) The outgoing Reserve Bank of India (RBI) Governor Raghuram Rajan maintained status quo on the policy rate in his last policy review on 9 August 2016. What is an important fact associated with this policy review? – This was the last bi-monthly policy to be decided by a RBI Governor

Explanation: The bi-monthly policy presented on 9 August 2016 was the last bi-monthly monetary policy to be decided by the Governor of the RBI. That’s because the broad-based 6-member Monetary Policy Committee (MPC) may take over the job of deciding monetary policy before the next review scheduled for 4 October 2016.

The repo rate (the interest rate at which the central bank provides short-term liquidity to banks to help them overcome liquidity mismatches) was left unchanged at 6.50% in this policy review. Rajan’s three-year term at the helm of RBI comes to an end on 4 September 2016.

With retail inflation ruling above its projection of around 5% for year 2017, the RBI held the rate steady.

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7) Who was appointed as the fourth Managing Director of State Bank of India (SBI) on 9 August 2016? – Dinesh Kumar Khara

Explanation: Dinesh Kumar Khara, who is presently working as MD and Chief Executive Officer of SBI Funds Management Pvt. Ltd., was appointed as a Managing Director of the SBI on 9 August 2016.

The Appointments Committee of Cabinet (ACC) has appointed Khara for a period of three years, extendable by two years after review of his performance.

SBI has four Managing Directors. The other three MDs are – B. Sriram, Rajnish Kumar and P.K. Gupta. The bank is headed by its Chairperson Arundhati Bhattacharya.

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8) One of India’s top investment bankers, Nimesh Kampani, on 2 August 2016 announced his decision to step down as managing director of the financial entity that he founded and built into one of India’s top i-banks. What is the name of this entity? – JM Financial Ltd

Explanation: Kampani is part of the legendary 3 Ks of the Indian investment banking scenario in the late 1990s and early 2000s, when foreign investment banks were yet to establish themselves in the country (Uday Kotak of Kotak Mahindra and Hemendra Kothari of DSP Merrill Lynch were the other two).

Kampani was trusted by the promoters of family business groups and was the confidant of many of India’s top family business groups.

Kampani’s relationships with the patriarchs of some of India’s biggest business houses encouraged Morgan Stanley to seek a joint venture with him. JM Morgan Stanley was formed in 1997. The partners decided to go their separate ways in 2007.

He will step aside with effect from 30 September 2016 as reaches 70 while his son Vishal will take over as the new MD.

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9) The Indian Parliament on 8 August 2016 cleared the GST bill as the Lok Sabha passed the amended GST bill that was passed by the Rajya Sabha earlier in the month. Which constitutional amendment is associated with this historic bill? – 122nd Constitutional Amendment

Explanation: The country moved a step closer to rolling out the goods and services tax (GST) regime on 8 August 2016 after Parliament passed the 122nd Constitutional Amendment bill.

The action now shifts to the states as the government seeks to get the bill ratified by a majority of the Indian states within the next one month to stay on course for its 1 April 2017 deadline on implementing the much-publicized tax reform.

GST, a destination-based tax, will subsume various indirect taxes at the central and the state levels including excise duty, service tax, value-added tax, entertainment tax and luxury tax.

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10) Which state on 12 August 2016 became the first state in the country to ratify the constitution amendment bill on the Goods and Services Tax (GST)? – Assam

Explanation: The Assam Assembly passed the resolution to ratify the constitution amendment bill on the Goods and Services Tax (GST) on 12 August 2016. Earlier the state Cabinet had approved the pertaining bill.

Thus Assam became the first state to pass the bill. Assam Finance Minister Himanta Biswa Sarma said the Chief Minister wanted Assam to become the first state to pass the bill to send a positive signal to the industry.

The Constitution (122nd Amendment) Bill for GST was passed by the Lok Sabha on 8 August 2016. The deadline for the rollout of the GST is 1 April 2017.

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