Banking and Financial Awareness – 121

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15 Nov, 2016

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1) India’s first banking robot ‘Lakshmi’ was launched in which bank on 10 November 2016? – City Union Bank

Explanation: India’s first banking robot ‘Lakshmi’ made her debut on 10 November 2016 in Chennai. It was launched in a branch of City Union Bank, the Kumbakonam (Tamil Nadu)-headquartered private banking entity.

Lakshmi is an artificial intelligence powered robot that became the first on-site bank helper in the country. It can answer queries pertaining to account balance, interest rates on home loans, fixed deposits, etc. Sensitive financial information like account details are displayed discreetly on the robot’s screen and not voiced.

It has been developed by Coimbatore-based Vishnu Engineering and took six months to become fully operational. It is worth mentioning that leading private bank – HDFC Bank, which is also experimenting with robots to answer customer queries, is testing its humanoid at its innovation lab.

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2) Who was given the charge of the task force set up by the Reserve Bank of India (RBI) on 14 November 2016 to oversee the recalibration of ATM machines as the government introduced new Rs 500 and Rs 2,000 notes? – S.S. Mundra (Deputy Governor of the RBI)

Explanation: With poor logistics and a time-consuming ATM recalibration process resulting in massive public inconvenience, the Reserve Bank of India (RBI) on 14 November 2016 constituted a task force to oversee the process of calibration. The task force is being headed by S.S. Mundra, RBI Deputy Governor.

The task force comprises of officials from the finance ministry, banks, and the central bank, as well as a representative from the Ministry of Home Affairs and the National Payments Corporation of India (NPCI). It will provide direction and guidance” for recalibrating ATM machines to dispense the new notes of Rs. 500 and Rs. 2000.

Re-calibration of ATMs involves multiple agencies – banks, ATM manufacturers, National Payment Corporation of India (NPCI) and switch operators, and multiple activities making it a complex operation requiring immense coordination among these agencies.

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3) Five hundred and 1,000 rupee notes were ceased as legal tender from the midnight after Prime Minister Narendra Modi made a surprise address to the nation pertaining to demonetization of these notes on 8 November 2016. These notes accounted for approximately how much percentage value of all currency in circulation? – Over 80%

Explanation: In a surprise move intended to eliminate black money and the growing menace of counterfeit currency notes, the Union government on 8 November 2016 scrapped currency notes of Rs. 500 and Rs.1,000 denominations. These account for over 80% of all currency in circulation by value.

Prime Minister Narendra Modi made a surprising and historic address to the nation to announce this move. He announced that existing Rs. 500 or Rs. 1,000 notes can be deposited in an individual’s bank or post office accounts between 10 November and 30 December 2016.

All banks and ATMs will be closed on 9 November 2016 and ATMs in some places on 10 November as well. Once the ATMs start functioning, there will be a withdrawal limit of Rs. 2,000 per debit card, which will be increased to Rs. 4,000 later.

The Reserve Bank of India (RBI) will issue new Rs. 500 and Rs. 2,000 notes starting from 10 November 2016. The new Rs. 500 note will feature the Red Fort and the new Rs. 2,000 note will feature Mangalyaan

For those who are unable to exchange their specified bank notes on or before 30 December 2016, they will be able to exchange notes along with necessary documentation at specified branches of the RBI by 31 March 2017.

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4) The RBI on 3 November 2016 came out with which new guideline pertaining to Masala Bonds? – It allowed banks to issue Masala Bonds

Explanation: On 3 November 2016 the Reserve Bank of India (RBI) allowed the banks to issue rupee denominated bonds, (or Masala Bonds), in the overseas market to shore up their capital base as well as for financing infrastructure and affordable housing.

The RBI had first announced its intention for letting banks tap the overseas market with rupee bonds on 25 August 2016 when it announced a slew of measures to develop the bond and currencies market.

Companies, including financial entities, were already allowed to raise money through masala bonds and a few issuances totaling Rs. 7,472 crore have already been done.

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5) A 4-tier GST tax structure was decided upon at the first day of the two-day GST Council meeting on 3 November 2016. What the minimum and maximum GST rates are, as agreed upon in the meeting? – Minimum 5% and Maximum 28%

Example: A 4-tier GST tax structure of 5, 12, 18 and 28%, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess, was decided by the all- powerful GST Council on 3 November 2016.

The lowest rate of 5% would be for common use items while there would be two standard rates of 12 and 18% under the Goods and Services Tax (GST) regime targeted to be rolled out from 1 April 2017.

The highest tax slab of 28% will be applicable to items which are currently taxed at 30-31% (excise duty plus VAT).

With a view to keeping inflation under check, essential items including food, which presently constitute roughly half of the consumer inflation basket, will be taxed at zero rate.

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6) The Goods and Service Tax Network (GSTN) was released on 8 November 2016 with the start of the enrolment process of VAT assessees to the GST portal. This process of enrolment was started from which two places? – Puducherry and Sikkim

Explanation: The enrolment of VAT assessees to Goods and Services Tax (GST) Portal started in Puducherry and Sikkim from 8 November 2016. On the same day, the GST Portal will be launched by the Government of India, as part of rolling out the GST from 1 April 2017.

Puducherry and Sikkim were selected as pilot States to be migrated to the new GST System. The enrolment of other States will be done subsequently and the entire process is expected to be completed by 15 January 2017.

The GSTN is expected to provide common and shared IT infrastructure for GST implementation, will transfer on-board to its platform the details of about 80 lakh existing assessees of excise, value-added tax, customs and service tax.

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7) The Benami Transactions (Prohibition) Amendment Act, 2016 came into effect from 1 November 2016. The act, which seeks to give more teeth to the authorities to curb benami transactions, is an amendment of which earlier Benami act? – Benami Transactions (Prohibition) Act 1988

Explanation: The Benami Transactions (Prohibition) Amendment Act, 2016 that came into effect on 1 November 2016, is an amendment of the older Benami Transactions (Prohibition) Act 1988.

The Act defines a benami transaction, as a transaction where in a property is held by or transferred to a person, but has been provided or paid by another person.

Earlier, any violation of the Act would lead to imprisonment of up to three years, or a fine, or both. Now, under the amended Act, any offender would stand to be punished with imprisonment of up to seven years and be charged a fine which may extend to 25% of the fair market value of the benami property.

If any false information is provided, it would lead to imprisonment for a time period of six months to five years and a fine of up to 10% of the fair market value of the benami property.

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8) The value of the equity portfolio of mutual funds achieved which milestone mark for the first time ever, as reported at the end of September 2016? – It was for the first time that the value of mutual fund equity portfolio in listed Indian firms crossed the portfolio holding of LIC

Explanation: According to the data collected by Prime Database, at the end of September, the value of mutual fund equity portfolio in listed firms stood Rs.4.94 lakh crore compared to Rs.4.75 lakh crore held by PSU insurance behemoth Life Insurance Corp. of India (LIC).

This was thus the first time that the country’s 44-firms strong mutual fund industry overtook LIC as a bigger owner of local stocks. Mutual fund holdings were spread across 1,088 companies while LIC has invested in 310 firms.

On total assets managed, however, mutual funds continue to lag LIC. In the September quarter, the 44 mutual fund houses, managed an average Rs.16.10 lakh crore of investor assets (as disclosed in the data from the Association of Mutual Funds in India (AMFI). In comparison, LIC, which manages insurance contracts for at least 250 million people, had total assets worth Rs.21 lakh crore.

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9) Which state topped the 2016 All-India State/Union Territory-wise Ease of Doing Business rankings, as announced by the Commerce and Industry Ministry on 31 October 2016? – Andhra Pradesh and Telangana (jointly)

Explanation: According to the All-India State/Union Territory-wise Ease of Doing Business rankings for year 2016, as announced by the Commerce and Industry Ministry on 31 October 2016, Andhra Pradesh and Telangana have jointly topped the list. On the other hand last-year’s topper Gujarat slipped to the third spot.

The top ten ranks in 2016 included Andhra Pradesh & Telangana (98.78% each implementation rate), followed by Gujarat (98.21%), Chhattisgarh (97.32%), Madhya Pradesh (97.01%), Haryana (96.95%), Jharkhand (96.57%), Rajasthan (96.43%), Uttarakhand (96.13%) and Maharashtra (92.86%).

These rankings cover the period from 1 July 2015 to 30 June 2016.

While last year only seven States had implemented over 50% of the total reform points and no State had an implementation percentage of over 75%, this year saw 17 States crossing the 50% implementation mark and 16 states have an implementation percentage of over 75%.

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10) Which company became the first to get approval for the Scheme for Sustainable Structuring of Stressed Assets (S4A) under which there is provision for converting a portion of large loan accounts into equity? – Hindustan Construction Company Ltd. (HCC)

Explanation: Infrastructure major Hindustan Construction Company Ltd. (HCC) became the first company to get approval for the Scheme for Sustainable Structuring of Stressed Assets (S4A) as the RBI mandated overseeing committee approved company’s application for the same. The ICICI-led Joint Lenders’ Forum had proposed the scheme for HCC.

HCC’s total funded debt of about Rs. 5,107 crore has been considered under the scheme, which will be divided into two parts. The first part (sustainable debt) amounts to Rs. 2,681 crore while the second part (unsustainable debt) totals Rs. 2,426 crore. The recast in equity will bring down the promoter holding from 36.07% to 27.44%.

S4A is the RBI’s latest attempt to chip away at the mountain of stressed loans smothering Indian banks. The scheme tries to strike a compromise between banks with problematic accounts and corporate defaulters of the non-willful kind, by converting a portion of large loan accounts into equity.

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