Banking and Financial Awareness – 119

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05 Nov, 2016

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1) Which are the 3 personalities who were named as the outside expert members of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) by the Union Government on 22 September 2016? – Chetan Ghate, Pami Dua and Ravindra Dholakia

Explanation: The Appointments Committee of the Cabinet on 22 September 2016 approved the names of Chetan Ghate, a Professor at Indian Statistical Institute; Pami Dua, Director at Delhi School of Economics (DSE); and Ravindra Dholakia, Professor at Indian Institute of Management, Ahmedabad, as 3 outside expert members of the Monetary Policy Committee (MPC) of the RBI.

The experts will serve for four years and are not eligible for re-appointment. With this MPC has become a 6-member committee (including other three members from the RBI).

The members of the committee from RBI are Governor Urjit Patel, Deputy Governor R. Gandhi, who is also in charge of the monetary policy, and executive director Michael Patra. The RBI governor will have a casting vote in case of a tie.

The MPC framework replaces the current system where the RBI governor and his internal team have complete control over monetary policy. While a committee advises RBI on monetary policy decisions, the central bank is under no obligation to accept its recommendations.

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2) The Union Cabinet on 21 September 2016 approved the merger of Railway Budget with the General Budget thus ending a 92-year old practice of preparing a separate budget for the railways. This shift has been done on the recommendation of which committee’s report? – Bibek Debroy Committee on Restructuring of Indian Railways

Explanation: After the meeting of the Union Cabinet on 21 September 2016, the Government announced that from now all proposals of Railway Budget will be part of the General Budget and presentation of the integrated budget will be advanced by around a month. It hopes that advancing the date will help initiate revenue mobilization and capital expenditure measures right from the beginning of the fiscal year.

However, functional autonomy of railway will be maintained. There will also be separate discussion on railway expenditure each year in the Parliament.

The move follows a suggestion to the effect by Niti Aayog member Bibek Debroy in his report on restructuring the Indian Railways. A committee headed by Debroy last year recommended that the Rail Budget should be phased out progressively and merged with the General Budget.

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3) In which year the practice of presenting a separate budget for Railways was started in India? – 1924

Explanation: It is worth mentioning that the first separate Rail Budget in India was presented in 1924. This practice was adopted following the recommendation of the 10 member-Acworth Committee in 1920-21, headed by British railway economist William Acworth.

This report led to reorganization of railway finances and the finances of railway were separated from the general finances of the Govt. of India.

The separation of Railway Budget from General Budget is the second major shift in the schedule of the budget by a National Democratic Alliance (NDA) government. The previous NDA government, under prime minister Atal Bihari Vajpayee in 2001, changed the time of presenting the budget to 11am, from the British era practice of presenting it at 5pm.

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4) Kotak Mahindra Bank is acquiring which microfinance entity for Rs. 139 crore, as announced by the bank on 29 September 2016? – BSS Microfinance

Explanation: According to a notification to the stock exchanges, the private sector bank Kotak Mahindra Bank is acquiring BSS Microfinance for Rs.139.2 crore. Through this deal Kotak Mahindra Bank will acquire 99.49% stake in this entity.

BSS Microfinance extends microfinance to poor, rural and semi-urban women, primarily for income-generating activities, and also for life quality improvement activities.

BSS had a loan book of Rs.483 crore at the end of the first quarter and a total of 728 employees. It is present in Karnataka and Maharashtra and is entering Madhya Pradesh.

This would be the second acquisition by the bank in less than two years. In November 2014, it acquired another private sector lender, ING Vysya Ltd, in a share-swap deal.

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4) Indian capital market regulator SEBI on 28 September 2016 came out with which historic announcement pertaining to commodities market? – It allowed commodity derivative exchanges to introduce trading in ‘options’

Explanation: On the occasion of the first anniversary of the merger of the erstwhile commodities regulator Forward Markets Commission (FMC) with itself on 28 September 2016, country’s capital market regulator Securities and Exchange Board of India (SEBI) unveiled options trading on commodity derivative exchanges.

Currently, the only instrument available in the commodity derivatives market is “futures” on individual commodities. Now these markets have been allowed options trading, for which SEBI’s prior approval is required.

Simultaneously, the Finance Ministry provided legal clarity by specifying a list of 91 commodities on which commodity derivative contracts will be permitted under the Securities Contracts Regulation Act 1956 (SCRA).

The commodities notified include 17 cereals and pulses, 12 oilseeds and oils, 12 spices, 11 metals, 3 precious metals, 4 plantation products, and 11 energy related products.

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6) ICICI Prudential Life Insurance came out with its Rs. 6,057 crore initial public offering (IPO) on 19 September 2016. What important fact is associated with this IPO? – It is the first-ever IPO by an insurance entity in the country

Explanation: ICICI Prudential Life Insurance’s IPO worth Rs. 6,057 crore is the first initial offering by an Indian insurance company. The IPO will close on 21 September 2016.

It is also the country’s second biggest IPO in terms of size after the public issue of Coal India Limited (CIL), which raised Rs. 15,000 crore via the capital market route in 2010.

ICICI Prudential Life Insurance, majority owned by ICICI Bank, has already raised Rs. 1,635.33 crore from the 40-odd anchor investors on 16 September, with some of the marquee names such as Morgan Stanley, Goldman Sachs, Nomura, Government of Singapore, UTI MF and HDFC Standard Life, among others.

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7) What is the name of the Chairman and Managing Director (CMD) of public sector-based Bank of Maharashtra, who in an unprecedented move was sacked from his post by the Union Govt. on 26 September 2016? – Sushil Muhnot

Explanation: In an unprecedented move, the Centre on 26 September 2016 sacked Sushil Muhnot, Chairman and Managing Director (CMD) of Pune-based Bank of Maharashtra. This sacking was done just 4 days short of his scheduled retirement on 30 September 2016.

Ravindra Marathe, who was serving as an Executive Director with Bank of India, was appointed new CMD of Bank of Maharashtra on the same day.

However, the government did not cite any reason for its action. Earlier this year, the Finance Ministry is reported to have served a show-cause notice to Muhnot asking him to explain why he should not be terminated from service for an allegedly occupying two houses.

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8) The Cabinet Committee on Economic Affairs (CCEA) on 28 September 2016 cleared a Rs 2,256 crore IT project of the Central Board of Excise and Customs (CBEC), which will help integrate CBEC’s system with the GST network before the rollout in 2017. What is the name of this project? – ‘Saksham’

Explanation: Project ‘Saksham’, a new indirect tax network of the Central Board of Excise and Customs (CBEC), was approved by the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on 28 September.

The total cost of the project is estimated to be Rs. 2256 crore, which will be incurred over a period of seven years.

Project Saksham will help in the implementation of Goods and Services Tax (GST). It will also help in the extension of the Indian Customs Single Window Interface for Facilitating Trade (SWIFT) and other taxpayer-friendly initiatives under Digital India and Ease of Doing Business of CBEC.

For Project Saksham, the IT systems of CBEC will be completed by 1 April 2017, when GST is to be introduced. The IT systems will be upgraded while the existing tax-payer services will be kept running.

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9) Who took over as the World Bank’s new Country Director for India, as notified by World Bank President Jim Yong Kim on 26 September 2016? – Junaid Ahmad (Bangladesh)

Explanation: Ahmad, a Bangladeshi national, took over as the new World Bank Country Director for India. He replaced Onnu Ruhl who completed his 4 year-term.

Ahmad was formerly the Chief of Staff to World Bank Group President Jim Yong Kim. An economist by training, Ahmad brings with him broad development experience.

After joining the World Bank in 1991 as a Young Professional, he worked on infrastructure development in Africa and Eastern Europe. He has since held several management positions, leading the Bank’s program in diverse regions including Africa, the Middle East and North Africa, as well as in India and South Asia.

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10) Union Govt. divested how much of its stake in the PSU entity Hindustan Copper Limited during September 2016? – 7%

Explanation: Union Govt. on 29 and 30 September 2016 offered 6,47,65,260 shares (comprising 7% of total paid up equity ) to public through offer-for-sale (OFS) route. 20% of the offer size was reserved for retail category.

The divestment trading took place on NSE as well as BSE for the non-retail and retail category respectively. The non-retail category got oversubscribed with 1.56 times. The government pocked approximately Rs. 400 crore through this stake-sale.

Hindustan Copper Limited is a vertically integrated company in the mining and metal sector, under Ministry of Mines. Government of India is the major stake holder in said CPSE, owning 89.95% of paid up equity.

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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.

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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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