Banking and Financial Awareness – 117

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31 Oct, 2016

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1) Vijay Kelkar, Ratan Tata and Nandan Nilekani are joining hands to start a microfinance institution (MFI) from their respective philanthropic capital. What is the name of this upcoming MFI? – Avanti Capital

Explanation: Vijay Kelkar, former finance secretary and chairman of the National Institute of Public Finance and Policy (NIPFP), Ratan Tata, chairman emeritus of Tata Sons and Nandan Nilekani, co-founder of Infosys Ltd and the architect of Aadhaar, are in the process of floating a new microfinance institution (MFI) named ‘Avanti Capital’ by investing in it.

Venkataramanan, managing trustee of the Sir Dorabji Tata Trust, will be the fourth founding director. The investment in this entity will be done from the respective philanthropic capital of the entrepreneurs.

Avanti Capital will be a technology-enabled financial inclusion vehicle and will focus on delivering affordable and timely credit to under-served and un-served segments in India.

Avanti will apply to the Reserve Bank of India (RBI) for registration and is expected to start operations before the end of the financial year.

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2) Urjit Patel was appointed by the Union Government as the new Governor of the Reserve Bank of India (RBI) on 20 August 2016. Patel, who will take charge on 4 September 2016, will become …………Governor of RBI – 24th

Explanation: On 20 August 2016 The Union Govt. named Urjit Patel as the 24th Governor of the RBI. He will take over from Raghuram Rajan when the latter leaves office after his term ends on 4 September 2016.

It is expected that the choice of Urjit Patel will ensure continuity at the RBI since he has been the deputy governor in charge of monetary policy. He is the eighth RBI Deputy Governor to be promoted as the Central Bank chief.

Patel has been instrumental in putting in place the flexible inflation targeting framework that the central bank is now following. Patel has also been responsible in making a number of other changes at the RBI including a revamp of HR processes.

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3) In an important step to prevent banks from building up large exposures to a few big corporates the RBI on 25 August 2016 proposed to cap the exposure limit of banks to a single borrower group at 25% of lenders’ equity capital. What is the present limit for the same? – 55%

Explanation: By capping the exposure limit of banks to a single borrower group at 25%, the Reserve Bank of India (RBI) has tried to curb the tendency of large loans to a single group.

At present, banks can go up to 55% of their tier-I capital in case of infrastructure loans. In the case of individual entities, the limit has been raised from 15% to 20%.

On the other hand the RBI announced measures that would help companies to raise money by floating bonds. The RBI has raised the limit for guarantees that banks can provide to bond offerings.

It is worth mentioning that gross non-performing assets (NPAs) of public sector banks stand at 11.3% of their loans due to their exposure to large corporates. Private banks have an NPA ratio of 2.8% due to their focus on retail and SMEs.

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4) Which bank became the first public sector bank to make locker visiting facility free for its customers, as announced by this bank on 20 August 2016? – Punjab National Bank (PNB)

Explanation: In a customer-friendly move, public sector lender Punjab National Bank (PNB) on 20 August 2016 made locker visiting facility free for its customers. Earlier, the customers were allowed 12 free visits at lockers in a year.

Now, the PNB locker holders can make any number of visits in a year without paying any additional cost. The new rule has been put in place since 1 August 2016. With this, PNB became the first public sector bank to make locker visiting facility free for its customers.

PNB used to charge customers Rs. 50 per visit after the limit of 12 free visits in a year. Banks in general charge customers to visit lockers beyond a permitted level in a year.

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5) During August 2016 the Union Govt. has decided in favour of banning all cash transactions above how much amount as was recommended by the Special Investigation Team (SIT) appointed by the Supreme Court? – Rs. 3 lakh

Explanation: To put a check on black money in the country, Narendra Modi-led NDA Government has decided to ban the cash transactions over Rs. 3 lakh. This was decided after the govt. received the recommendations from the Special Investigation Team (SIT) appointed by the Supreme Court.

Since the Jan Dhan Yojna was launched two years ago, the number of bank accounts have squirted. Now, businessmen will have no excuse in payments making via banks. Until now, businessmen cite the reason for holding huge cash for making payments to employees.

The finance ministry is also trying to promote use of plastic money and recently did away with transaction charges for government services.

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6) Which public-sector undertaking received the certificate of incorporation for its Payments Bank during August 2016? – India Post

Explanation: The Department of Posts’ plan to set up a payments bank came one step closer to reality with The India Post Payments Bank Ltd (IPPB) receiving the certificate of incorporation from the Registrar of Companies on 17 August 2016.

The Department of Posts is expected to complete the rollout of its branches all over the country by September 2017.

The India Post Payments Bank will be managed professionally and most of its Grade A employees will be hired from market.

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7) The RBI on 25 August 2016 allowed banks to raise capital through Masala bonds in the overseas markets. This facility was available till now to which entities? – Corporates and Non-banking lenders

Explanation: In an important reform in the field of capital and currency markets, the RBI on 26 August allowed banking entities to issue the so-called ‘Masala bonds’ and to accept corporate bonds under the liquidity adjustment facility (LAF).

From now Indian banks will be able to issue rupee-denominated bonds overseas (or the Masala bonds) for their capital requirements and for financing infrastructure and affordable housing.

Currently, masala bonds can be issued only by corporates and non-banking lenders like, HFCs and large NBFCs. Masala bonds are instruments through which Indian entities can raise funds by accessing overseas capital markets, while the bond Investors hold the currency risk.

It is worth mentioning that two corporate entities – HDFC and NTPC have already made use of this facility to raise over Rs. 5,000 crore, but the segment was not open to banks.

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8) According to media reports appearing on 22 August 2016, the Union Government could present the next Union Budget by the end of January instead of last day of February as has been the practice of years. What is the primary reason for this proposed change? – To complete the Budget exercise before the beginning of the new financial year

Explanation: The Union Budget has for decades been presented on the last day of February, but this could soon change with the government mulling advancing it to January-end. This change is being planned so as complete the exercise before the beginning of the new financial year.

While the Constitution does not mandate any specific date for presentation of the Budget, it is usually presented on the last working day of February and the two-stage process of parliamentary approval takes it to mid-May.

As the financial year begins on 1 April, the government in March takes Parliament approval for Vote on Account for a sum of money sufficient to meet expenditure on various items for two to three months.

The Finance Ministry is feeling if the Budget process was initiated earlier, there would be no need for a Vote on Account and a full Budget can be approved in one stage before.

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9) In an important step towards cashless future in India, National Payments Corporation of India’s (NPCI’s) Unified Payments Interface (UPI) went live on 25 August 2016 that will enable customers to make everyday payments with just a few taps on their smartphones. Of the participating 21 banks, which four banks launched their UPI-enabled apps on 25 August? – Axis Bank, Union Bank, Federal Bank and Bank of Maharashtra

Explanation: India moved closer to a cashless future on 25 August 2015 as four banks – Axis Bank, Union Bank, Federal Bank and Bank of Maharashtra – launched their Unified Payments Interface-based (UPI-based) apps. These 4 banks launched their UPI-enabled android apps on Google Play Store.

The UPI system will allow customers to safely and instantaneously transfer funds almost as easily as they send a text message.

The system uses a single identifier that eliminates the need to exchange sensitive information such as bank account numbers or credit card details during a financial transaction.

The UPI system will be available only for bank customers with Android smartphones initially. Union Bank’s UPI app, Federal Bank’s Lotza, Axis Bank’s Axis Pay and Bank of Maharashtra’s MahaUPI apps are now UPI-enabled. However other participating banks will also launched their UPI-enabled apps very shortly.

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10) Major telecom companies rolled-out which new verification facility for mobile connections from 24 August 2016? – Instant Aadhaar based eKYC

Explanation: Major telecom companies like Airtel, Vodafone and Idea from 24 August 2016 started the e-KYC (electronic-Know Your Customer) facility for activation of SIM cards.

Under this, customers will just need to know their Aadhaar number, which along with their fingerprint, will be good enough for confirmation for both new pre-paid and post-paid connections.

It is worth mentioning that earlier in August 2016 the Department of Telecom (DoT) had issued a circular notifying “use of ‘Aadhaar’ e-KYC service for issue of mobile connections.

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Know, who is Vijay Kelkar and what is PPP !

Vijay Kelkar is a renowned economist and a former Finance Secretary. He was appointed head of newly constituted committee to give recommendations to recast the model of Public-Private-Partnership (PPP) model in India. India is one of the largest PPP market with over 900 projects. The Kelkar committee will review the PPP policy, suggest a better risk-sharing mechanism between private developers and the government after analysing such projects.

Know, who is Yaduveer Krishnadatta Chamaraja Wadiyar !

Yaduveer Krishnadatta Chamaraja Wadiyar was crowned as the new Maharaja of of Mysuru (Mysore) royal family. He is the 23-year old grandson of Princess Gayathri Devi, who was the eldest daughter of the last Maharaja of Mysore, Sri Jayachamarajendra Wadiyar. The coronation was held at Mysuru’s famous Amba Vilas Palace, which was decked up for the occasion.

Know about Sepp Blatter!

Swpp Blatter, was re-elected as FIFA president for a fifth term at the 65th Annual Congress of FIFA held at Zurich for four year term.

Prince Ali bin al-Hussein of Jordan stood against Blatter in this election. It is worth mentioning that FIFA is going through a major controversy regarding corruption in the organisation with two FIFA vice presidents and a recently elected FIFA executive committee member still in custody.

 


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