Banking and Financial Awareness – 78

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18 Jan, 2015

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1) In an important development the Finance Ministry during January 2015 gave what assurance to public sector banks (PSU banks) and financial institutions? – Full freedom in matters related to commercial decisions, transfers and postings

Explanation: The Finance Ministry wrote letter to all public sector banks and financial institutions on 5 January 2015 to take all commercial decisions in the best interest of the organisation without any fear or favour. This assurance followed a two-day brainstorming meeting on 3-4 January 2015 in Pune where Prime Minister Narendra Modi discussed ideas to improve the health of state lenders, who are facing mounting bad loans and corporate governance issues. It is worth mentioning that f or years, political interference and union opposition have thwarted major reforms at the lenders that account for more than 70% of total outstanding loans in the sector. PSU banks recorded the highest level of stressed loans at 12.9% of their total advances in September last year, while the same ratio for private sector banks was at 4.4%, according to the latest RBI data.


2) The shareholders of Kotak Mahindra Bank and ING Vysya Bank approved the proposal to merge ING Vysya Bank with Kotak Mahindra Bank. The management of the banks expects the new entity to be operational by 1 April 2015. In terms of total business, this new entity would be India’s …………….. largest private bank? – Fourth

Explanation: The deal will make Kotak Mahindra the fourth-largest private bank in India, in terms of total business after ICICI Bank, HDFC Bank and Axis Bank. The combined banking entity will have 1,214 branches in India. However, the merger needs regulatory approvals, including from the Reserve Bank of India (RBI) and the Competition Commission of India. ING Vysya Bank’s shareholders had approved the merger proposal on 7 January while shareholders of Kotak Mahindra gave their approval to the same on 8 January 2015. The top management of both banks had made the merger announcement on 20 November 2014.


3) ‘Gyan Sangam’ – the 2-day bankers retreat, which concluded on 3 January 2015, was held in which city? – Pune

Explanation: ‘Gyan Sangam’ was a 2-day “Retreat for Banks and Financial Institutions” and was held at National Institute of Banking Management (NIBM), Pune. Participants at “Gyan Sangam” included Dr. Hasmukh Adhia, Secretary, Department of Financial Services (DFS), regulators, officers of the Ministry of Finance, top management of all Public Sector Banks (PSBs), insurance companies and financial institutions (FIs). The idea of organising such a retreat is to provide an informal academic environment, which can bring out the creative best of the minds of professionals and regulators. It was inaugurated by Jayant Sinha, Minister of State for Finance while Prime Minister Narendra Modi addressed the concluding session.


4) Indian banks have achieved the target set by the government to open 10 crore accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY) a month before the deadline of 26 January 2015. How many bank accounts have been opened till 26 December 2014 as disclosed by the govt.? – 10 crore 8 lakh

Explanation: Banks have issued 7.28 crore RuPay Cards as on 22 December 2014. In order to achieve universal access of banking, banks have deployed bank Mitras in 1.23 lakh Sub Service Areas (SSAs) leaving a gap of 6,031 uncovered SSAs. Banks were asked to complete deployment of bank Mitras latest by 15 January 2015 and display details of the same on their own website as well as on State Level Bankers’ Committee. This was to ensure that all Bank Mitra devices are online inter-operable through RuPay cards.


5) The finance ministry and the RBI are discussing a proposal to create a holding company to which the equity of state-owned banks can be transferred. This is being seen as first step to effect much-needed structural changes in the banking sector of the country. Which RBI-appointed committee had recommended this? – P.J. Nayak Committee

Explanation: The Committee, led by former Chairman and CEO P.J. Nayak, had submitted its report to the RBI in May 2014. A separate holding company will help separate ownership and control in public sector banks and distance the government, the dominant shareholder, from their management.


6) The Union Government on 4 January 2015 announced Rs. 1,900 crore for e-governance project “Panch Deep”. This project seeks to achieve what? – To automate all transactions between the organisations and employees with regard to ESIC

Explanation: Project “Panch Deep” is an e-governance project which will deploy a massive ERP (Enterprise wide Resource Planning) across the country connecting all the ESIC (Employees State Insurance Corporation) and other organisations in the ecosystem. For this the employees will get unique biometric cards. The project will also take care of payments of third party bills. The IT backbone under this project will also develop a huge repository of medical records, making it easier for doctors and patients.


7) Prime Minister Narendra Modi on 1 January 2015 announced the decision to replace the 65-year-old Planning Commission with a new organisation named NITI Aayog. The term NITI is named after which a newly formed body? – National Institution for Transforming India (NITI)

Explanation: National Institution for Transforming India (NITI) will act more like a think tank or forum in contrast with the Commission which imposed five-year-plans and allocated resources to hit set economic targets. NITI Aayog includes leaders of India’s 29 states and seven union territories. But its full-time staff – a deputy chairman, Chief Executive Officer and experts – will answer directly to the Prime Minister, who will be chairman. The present NDA government has accused the Planning Commission of stifling growth with Soviet-style bureaucracy. Despite being blamed by critics for the slow growth that long plagued India, the Commission survived the market reforms of the early 1990s.


8) On 5 January 2015 who was named as the first Vice-Chairman of the newly announced NITI Aayog (Policy Commission), which replaced Planning Commission? – Arvind Panagariya

Explanation: Arvind Panagariya is an eminent free market economist and has been an Economics professor at Columbia University in New York. He, as vice chairman, would have a pivotal role in coordinating economic strategy and hold cabinet rank. Economist Bibek Debroy along with former secretary of defence research and development V.K. Saraswat were named as the other full-time members of the commission. NITI Aayog (the new commission) was set up to modernise economic strategy after decades of Soviet-style central planning. Panagariya’s market-friendly, pro-growth economics has helped shape Modi’s outlook and is seen by many as an attack on overbearing labour regulations and state-run companies.


9) Market regulator Securities and Exchange Board of India (SEBI) on 31 December 2014 notified a new rule pertaining to mutual funds. Under this new rule what allowance has been given? – The new rule allows launch of two new schemes in a year by mutual fund houses with net worth below Rs. 50 crore

Explanation: However, such permission would be considered on a case-to-case basis, depending on such Asset Management Companies (AMCs) demonstrating that serious efforts are being made by them to meet the net worth requirements within the prescribed timelines. The move came in force with immediate effect. SEBI, in February 2014, had hiked the minimum net worth requirement for mutual funds to Rs. 50 crore from Rs. 10 crore in a move to weed out non-serious players and ensure stability of the financial system. At that time, 19 fund houses had net worth below this threshold, but a few of them have since complied with the requirement by increasing their net worth to the desired level.


10) The Union Government on 29 December 2014 approved raising its stake up to 51% in which financial institution so as to make it a government company? – IFCI

Explanation: Industrial Finance Corporation of India (IFCI), which is the oldest financial institution in the country, was established on 1 July 1948. The Union Cabinet chaired by Prime Minister Narendra Modi approved infusion of Rs. 60 crore in IFCI to make it a government company by way of acquisition of preference shares from existing shareholder(s). It was set up in 1948 as a statutory corporation under the Industrial Finance Corporation Act, 1948. The Act has since been repealed by the Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993 and IFCI Ltd was registered under the Companies Act, 1956 on 31 March 1993.  Till now, IFCI was not a Government Company under section 2(45) of the Companies Act 2013.


 


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