Banking and Financial Awareness – 81

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08 Feb, 2015

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Monetary-Policy-2015

1) The Reserve Bank of India (RBI) on 3 February 2014 released its 6th Bi-monthly Monetary Review. It decided to keep the most important Repo Rate unchanged at 7.75%. Which is the only prominent rate that was changed in this review? – Statutory Liquidity Ratio (SLR)

Explanation: The RBI reduced the statutory liquidity ratio (SLR) of scheduled commercial banks by 50 basis points from 22.0% to 21.5% of their net demand and time liabilities (NDTL) with effect from the fortnight beginning 7 February 2015. The reduction in SLR is expected to release more funds in the economy.

Following are the main highlights of RBI’s 6th Bi-Monthly Monetary Policy Review

Repo rate unchanged at 7.75%

Consequentially, Reverse Repo Rate remain unchanged at 6.75%

Marginal standing facility (MSF) rate remain unchanged at 8.75%

Cash Reserve Ratio (CRR) unchanged at 4%

Statutory Liquidity Ratio (SLR) reduced from 22.0% to 21.5%

Targetted inflation by January 2016 at 6%

GDP growth estimated at 5.5% for 2014-15 and 6.5% for 2015-16 (under old base year)

Foreign exchange remittance limit raised to $2,50,000 per person annually


2) The RBI on 3 February 2015 increased the amount Indians can remit in foreign exchange without end-use restrictions to $ 2,50,000 per year per person. What was this limit at present? –  $ 1,25,000 per year per person

Explanation: The RBI had reduced the eligibility limit for foreign exchange remittances under the Liberalised Remittance Scheme (LRS) to USD 75,000 in 2013 as the rupee came under strong pressure. With stability in the foreign exchange market, this limit was enhanced to USD 125,000 in June 2014 without end-use restrictions, except for prohibited foreign exchange transactions such as margin trading, lotteries and the like.


3) The RBI deadline for applying for the payments banks ended on 2 February 2015. Which companies/groups are the prominent bidders for the payments banks which will offer services such as remittances and deposits? – Reliance Industries Limited (RIL), Aditya Birla Nuvo Ltd., Future Group, UAE Exchange India, Bharti Airtel, Vodafone, IIFL, PayTM and Oxigen

Explanation: Payments banks are proposed to put basic banking within the reach of hundreds of millions. In a country like India where nearly half the population does not have access to formal banking payments banks are expected to play the role of the ‘last-mile bank’. Payments banks will be allowed to not only accept cash, but also pay it out, boosting their appeal for low-income savers. They will, however, not be allowed to provide loans. Their precursors, Pre-paid Payment Instrument (PPI) providers, were not allowed to pay out cash. Payments banks could cut the use of cash in an economy where nine out of 10 transactions are still paid in notes and coins and kick-start the use of low-cost payment forms like mobile money that have been used by only one in every 300 Indians.


4) Reliance Industries Limited (RIL) has applied for a payments bank licence, the application deadline for which ended on 2 February 2015. It tied up with which bank for seeking this licence? – State Bank of India (SBI)

Explanation: RIL has entered into a partnership venture with SBI for seeking payments bank licence. Under this, RIL will be the promoter of the payments bank entity while SBI will be joint venture partner with equity investment of up to 30%. The partnership is in accordance with the guidelines for payments bank issued by RBI. The proposed payments bank by RIL-SBI combine will leverage SBI’s nationwide distribution network and risk management capabilities along with the substantial investments made by RIL in its retail and telecom businesses.


5) The Reserve Bank of India (RBI) on 30 January 2015 constituted a 7-member committee on urban cooperative banks (UCBs). The committee will primarily re-examine and recommend appropriate set of businesses, size, conversion and licensing terms for the UCBs. Who is heading this committee? – R. Gandhi (Deputy Governor, RBI)

Explanation: The committee will examine whether it is time to give permits to new UCBs as per the recommendations of the expert committee on licensing of new UCBs set up under the chairmanship of Y.H. Malegam. The committee will determine the modalities of implementing a suggestion made by the Malegam committee regarding 50% in value of deposits should be held by voting members to assure that confidence regarding proper management is generated among investors. Other important members of the committee are M.V. Tanksale from Indian Banks’ Association (IBA), Suma Varma, principal chief general manager, department of cooperative banking regulation, RBI and Joseph Raj, joint legal advisor from the legal department at RBI.


6) Union Govt. sold its 10% stake in Coal India Limited (CIL) on 30 January 2015. This stake sale was oversubscribed 1.05 times and fetched about Rs. 22,600 crore. This was the biggest ever share sale by any private or public sector company in India. It exceeded the previous record of over Rs. 15,000 crore by CIL itself. That record-making stake sale was done by CIL in which year? – 2010

Explanation: The government had offered to sell 31.58 crore shares, or 5% stake, in CIL through a public offer, with an option to sell another 5%. At the floor price of Rs. 358 apiece, the public offering is estimated to fetch Rs. 22,600 crore to the exchequer. This will make up for around half of the budgeted disinvestment target that was targetted by the Union Govt. for 2014-15. Prior to the Coal India share sale, the government had managed to raise just Rs 1,715 crore through selling stakes in steel maker SAIL. Till date, the highest-ever divestment collection in a year was Rs 23,956 crore in 2012-13 and that record has been broken now.


7) India on 30 January 2015 revised its economic growth (GDP) for fiscal year 2013-14 from the previously reported 4.7% to 6.9%. It also revised its GDP for 2012-13 from 4.5% to 5.1%. What is the reason for this upward revision? – A change in the formula to measure the economy by the govt. and change in base year

Explanation: The new measurement of gross domestic product (GDP) includes under-represented and informal economic sectors as well as new items such as smart phones and LED television sets. This move will make it easier for the government to meet fiscal deficit goals. A change in base year has been implemented and the new base year is 2011-12 instead of 2004-05. The base year is altered every five years and the change in measure of GDP data is to bring it in line with global standards.


8) India Ratings (Ind-Ra), a leading rating agency of the county, on 28 January 2015 stated that the revision in base year of India’s national accounts will increase the size of the economy to Rs. 111.7 trillion in the financial year 2014-15. With a view to present a more realistic picture of the economy, the government is coming out with a new series of Consumer Price Index (CPI) with a new base year. Which new base year is being used for the same? – 2011-12

Explanation: Year 2004-05 was the base year for computing the economic growth rate till now. The base year of the national accounts is changed periodically to take into account the structural changes which take place in the economy and to depict a true picture of the economy through macro aggregates. From January 2015 the Union Government will release the data pertaining to the Gross Domestic Product (GDP) with a new base year of 2011-12. This data will be released in February 2015. This new base year has been chosen so as to present a more realistic picture of the economy as it would include more sectors. Ind-Ra expects the size of the Indian economy to increase 6% to Rs. 111.7 trillion ($1.8 trillion) in 2014-15 from the earlier estimate with the change of base to 2011-12.


9) MMP Mobi Wallet Payment Systems Limited (MMPL), a Tata Teleservices subsidiary, launched an open loop prepaid, Visa powered, PAY Smart card on 28 January 2015. The card will provide a platform for the users to move away from traditional cash based transactions into an easy, secure and private mode of payment. MMPL launched this card in partnership with which private bank? – RBL Bank (Ratnakar Bank Limited)

Explanation: By obtaining a PAY Smart card, mRUPEE customers will be able to withdraw money from Visa licensed ATMs and also pay for goods and services at all merchants that accept Visa debit/credit cards nationally. The minimum money value the PAY Smart card would hold is 200 rupees with the maximum value being 1 lakh rupees at any point in time. mRUPEE is a payment gateway service and Mobile Money Order & Semi Closed Wallet service of MMPL. RBL Bank is one of India’s fastest growing scheduled commercial banks with an expanding presence across the country. It has currently grown to a network of over 180 branches / 350 ATMs across 13 Indian States and Union Territories.


10) Private sector IndusInd Bank launched a co-branded credit card for football fans on 29 January 2015. It has tied up with which renowned English Premier League (EPL) club for this card? – Chelsea Football Club

Explanation: The card provides attractive offers on dining, entertainment, personal grooming, travel and rewards proposition depending on the spending pattern of the customers. With this card, the bank has tried to strengthen the Chelsea affinity through two specially designed card designs, while further driving the football fans’ connect with the club through offers, tie-ups and discounts on merchandise and collectibles on Chelsea’s official online megastore.


 


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Previous Responses on This Article

  1. Deepak Rai says:

    This is great informative post ….
    I would like to request u If it is possible to provide the basic information of various provisions in banking industry in recent ,keeping in mind the trends of mcqs asked in various officer level banking xams…..

  2. akkisaxena says:

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  3. chitrangi says:

    best content …

  4. minakshivij says:

    Amazing ..all information at one place..thanks NiRDeShAk

  5. abhijit23 says:

    excellent

  6. anuja_namdev says:

    thank you great work… 🙂

  7. mallikarjunaprasad says:

    THANKS TO EDITORIAL TEAM

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