Banking and Financial Awareness – 123

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02 Jan, 2017

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1) Prime Minister Narendra Modi on 30 December 2016 launched a new mobile app for enabling simpler payments without cash. What is the name of this app that supports USSD payments and works even on basic phones? – Bharat Interface for Money (BHIM)

Explanation: Bharat Interface for Money (BHIM) is the name of the newest mobile app of the Union Government on 30 December 2016 that is expected to make digital payments simpler. The app, launched by PM Narendra Modi, has been positioned to play a big role in the government’s push for digital transactions.

The BHIM app is named after Dr. B.R. Ambedkar.

BHIM allows customers to transact electronically without having to use a credit or debit card, or by creating and storing a mobile wallet. All UPI (United Payments Interface)-connected banks accept BHIM. Even banks not connected to UPI can receive money through BHIM through IFSC, an 11-digit code assigned to every bank branch by the Reserve Bank of India.

Even without a smartphone, anyone can use BHIM to make payments by dialing *99# from any kind of mobile phone (number registered with the bank).

BHIM is available on Android and iOS. There is a Rs. 10,000 per transaction limit, and Rs. 20,000 per day for BHIM.

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2) What is the main recommendation of the Watal Committee on Digital Payments which submitted its report to the Union Government during December 2016? – An independent payments regulator within the framework of the RBI should be established

Explanation: The Union Government in August 2016 had constituted a committee to suggest ways to encourage India’s movement towards a cashless economy. This committee was headed by former finance secretary Ratan Watal. The committee came out with its recommendations during December 2016.

The committee has recommended that payments regulations should be independent of the Reserve Bank of India (RBI) but should come under its framework. It has thus has mooted the creation of a Payments Regulatory Board (PRB) within the central bank- an independent decision making body having some members from outside RBI.

The panel has also suggested strengthening the payment and settlements Act to include clauses for consumer protection. These include ensuring that the customer is not liable for losses arising from unauthorized transactions, as well as an option to approach the regulator for grievances. It has also sought to address issues on data protection and security.

The report has recommended opening up of the payment systems like the real-time gross settlement system (RTGS) even to non-bank payment service providers.

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3) What is the name of the new 24-hour TV channel launched during December 2016 by the Ministry of Electronics and Information Technology (MeitY) with the primary objective of pushing digital transactions? – ‘DigiShala’

Explanation: A new 24-hour satellite channel named ‘DigiShala’ was launched by the Ministry of Electronics and Information Technology (MeitY).

‘DigiShala’ will enable and empower every citizen of the country, especially farmers, students, dalits and women in rural areas, to learn the usefulness and benefits of digital payment in our everyday life. The channel will inform and educate about various digital payment options through step by step demos of digital payments using UPI, USSD, Aadhaar-enabled payment systems, e-wallets and cards.

The channel would be managed by Doordarshan (DD) and piggyback on its infrastructure. Originally it has only three to four hours of original content.

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4) The foreign direct investment (FDI) in India crossed which milestone figure in September 2016, as disclosed during December 2016? – $300 billion

Explanation: According to data disclosed during December 2016, India crossed the USD 300 billion foreign direct investment (FDI) milestone between April 2000 and September 2016. The cumulative FDI inflows during the period amounted to USD 310.26 billion.

India crossed the USD 300 billion mark at a time when the global economic slowdown has had a dampening impact on FDI flows which are expected to fall this year (2016-17).

Thirty three per cent of the FDI came through the Mauritius route, apparently because the investors wanted to take advantage of India’s double taxation avoidance treaty with the island nation. India received USD 101.76 billion from Mauritius between April 2000 and September 2016.

The other big investors have been from Singapore, the US, UK and the Netherlands.

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5) India recently overtook which major country in terms of the size of the economy to emerge as the sixth largest economy in the world as reported on 19 December 2016? – United Kingdom

Explanation: In a major achievement, India has managed to overtake its erstwhile colonial master United Kingdom in terms of the size of the economy – the first time after nearly 150 years. This was mainly due to Britain’s recent Brexit-related problems and India’s rapid economic growth.

Due to nearly 20% decline in the value of the pound over the last 12 months, UK’s 2016 GDP of GBP 1.87 trillion converted to $2.29 trillion at exchange rate of GBP 0.81 per $1, whereas India’s GDP of INR 153 trillion converted to $2.30 trillion at exchange rate of INR 66.6 per $1.

Furthermore, this gap is expected to widen as India grows at 6 to 8 per cent p.a. compared to UK’s growth of 1 2% p.a. until 2020, and likely beyond.

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6) The Reserve Bank of India (RBI) on 21 December 2016 imposed penalty on which 5 foreign banks for violation of its instructions on reporting requirements of the FEMA? – Deutsche Bank, Standard Chartered Bank, Bank of America, Bank of Tokyo Mitsubishi and Royal Bank of Scotland (RBS)

Explanation: The 5 foreign banks – Deutsche Bank, Standard Chartered Bank, Bank of America, Bank of Tokyo Mitsubishi and Royal Bank of Scotland (RBS) were fined by the RBI for violation of its instructions on reporting requirements of the Foreign Exchange Management Act, 1999 (FEMA).

Deutsche Bank has been imposed fine of Rs 20,000, while Bank of America, Bank of Tokyo Mitsubishi, Royal Bank of Scotland and Standard Chartered Bank have been fined Rs 10,000 each.

The penalties have been imposed in exercise of the powers vested in the Reserve Bank under the provisions of Section 11(3) of FEMA 1999, taking into account, the violations of the instructions/ directions/ guidelines issued by the RBI, from time to time.

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7) With the primary objective of hastening India’s shift towards a cashless economy, the Union Government announced a slew of measures to encourage digital payments on 8 December 2016. Under the announcements, the monthly rental on point of service (PoS) terminals provided by state-owned banks has been capped at – Rs. 100

Explanation: Discounts ranging between 0.5% and 10% were announced by the Union Govt. on 8 December 2016 to encourage digital transactions vis-à-vis physical currency for use of various services.

The incentives are mostly for services provided by Central public sector undertakings, public sector banks and the Railways. Following are the main steps taken by the Govt.

The monthly rental on around 6,50,000 point of service (PoS) terminals provided by state-owned banks capped at Rs. 100

No service tax on digital transactions up to Rs. 2000

Online purchase of rail tickets to come with a free accidental insurance cover of Rs. 10 lakh. The Rail Ministry expects online ticket booking transactions from 58% to 78%

Discount of 0.75% on digital purchases of petrol and diesel from state-owned outlets

0.5% discount for digital purchase of monthly and season tickets for suburban rail travel

Villages with population less than 10,000 to get two PoS machines each. There are around 1 lakh such villages with an approximate population of 75 crore

Kisan credit card holders to get Rupay Kisan cards

State-owned insurers to give 10% discount on online purchase of general insurance policy, 8% discount for life insurance policy

5% discount on digital payments to railways for catering, accommodation, etc.

10% discount on toll payments using RFID cards and fast tags

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8) Who was appointed as the new Chairman of state-owned behemoth Life Insurance Corp. of India (LIC) during December 2016? – V.K. Sharma

Explanation: The Union Govt. on 14 December 2016 appointed V.K. Sharma as the new Chairman of Life Insurance of Corporation (LIC) of India. He has been appointed for a period of 5 years. Sharma had been serving as LIC’s managing director since November 2013.

He replaced S.K. Roy who retired from the post in September 2016.

Having joined LIC as a direct recruit officer in 1981, Sharma has served as the chief executive of its mortgage subsidiary LIC Housing Finance Ltd and zonal manager in charge of the south zone.

LIC is the largest financial institution in the country with over Rs. 22 trillion in assets, which is over 15% of India’s gross domestic product (GDP) of Rs.134 trillion.

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9) The Union Govt. notified the new Income Declaration Scheme (IDS) along with other provisions of the Taxation Laws (Second Amendment) Act, 2016 on 16 December 2016. The scheme came into effect from 17 December 2016. What is the deadline to declare unaccounted income under this scheme? – ‘31 March 2017’

Explanation: Tax evaders can declare their unaccounted income till 31 March 2017 under the government’s new income disclosure scheme (IDS), officially known as the Pradhan Mantri Garib Kalyan Yojana.

This is the second such income disclosure scheme brought in by the government this year, and the first after the cancellation of old high-value banknotes on 8 November 2016, gives tax evaders another chance to come clean. The first scheme closed on 30 September 2016.

Under the scheme, a declarant of undisclosed income needs to pay a tax of 30%, a penalty of 10% and a Pradhan Mantri Garib Kalyan Cess of 33% on the tax, all of which add up to around 50%.

In addition, the declarant will have to deposit 25% of the undisclosed income in the zero-interest ‘Pradhan Mantri Garib Kalyan Deposit Scheme’ for four years. The declarant needs to furnish his/her permanent account number (PAN) while making the declaration. Part of the proceeds of the scheme will be used for welfare schemes for the poor.

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10) Which South-American country ordered demonetization of its largest denomination currency note on 11 December 2016 in an effort to target the alleged cash hoarding and huge inflation in the country? – Venezuela

Explanation: Venezuelan President Nicolas Maduro on 11 December 2016 signed an emergency decree ordering the country’s largest banknote, the 100 bolivar bill, taken out of circulation. The government is of the view that this will thwart the cash hoarders in Colombia.

It is worth mentioning that Venezuela is the midst of an economic crisis and crippled with the world’s highest inflation. The country is preparing to issue new banknotes and coins in values up to 200 times the highest denomination currently available. The 100 bolivar bill is worth fewer than three cents of a dollar at current market rates. One bill can barely cover the cost of a piece of candy.

The International Monetary Fund (IMF) has forecast the inflation rate will hit 475% by the end of this year. Falling prices for Venezuela’s crucial oil exports have caused a shortage of dollars in the country, driving up prices of imports of food, medicine and other crucial goods.

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