16 Feb, 2015
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Banking Awareness, Uncategorized,
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1) The Finance Ministry on 7 February 2015 announced that it will soon provide capital infusion worth Rs. 6,990 crore to nine public sector banks. This infusion will be made from the Rs. 11,200-crore provided for in this year’s budget for capitalisation of banks. Which bank would get highest capital infusion? – State Bank of India (SBI)
Explanation: SBI would get capital infusion amounting to Rs. 2,970 crore, followed by Bank of Baroda (Rs. 1,260 crore) and Punjab National Bank (Rs. 870 crore). For this year’s allocation, a new criterion has been adopted by the Government. Only banks that are more efficient would be rewarded with extra capital for their equity so that they can further strengthen their position. The methodology for arriving at the amount to be infused into these banks has been based on efficiency parameters. First, the weighted average of return on assets (ROA) for all public sector banks, for the last three years put together, was arrived at and all those who were above the average were considered. The second parameter that has been used is return on equity (ROE) for these banks for the last financial year.
Break-up of Capital Infusion
Name of Bank Amount (in Rs. Crore)
Bank of Baroda 1,260
Punjab National Bank 870
Canara Bank 570
Syndicate Bank 460
Allahabad Bank 320
Indian Bank 280
Dena Bank 140
Andhra Bank 120
2) The Reserve Bank of India on 3 February 2015 constituted a committee to evaluate applications received for the proposed small finance banks. Who is heading this committee? – Usha Thorat, former Deputy Governor of RBI
Explanation: The purpose of the small banks will be to provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation. The objective for these Small Banks is to increase financial inclusion by provision of savings vehicles to under-served and unserved sections of the population, supply of credit to small farmers, micro and small industries, and other unorganised sector entities through high technology-low cost operations. RBI had received 72 applications for small finance banks till 2 February 2015. However, the number could change as this excludes applications that might have been received at other venues. Those who applied to the Reserve Bank of India (RBI) for small bank licences included Nirmal Jain-led IIFL Holdings Ltd, UAE Exchange, Kerala-based ESAF Microfinance, Punjab-based Capital Area Local Bank and Andhra Pradesh-based Coastal local Area Bank.
3) The Reserve Bank of India on 3 February 2015 constituted a committee to evaluate applications received for payments banks. Who is heading this committee? – Dr. Nachiket Mor, Director, Central Board, RBI
Explanation: Objective of payments banks is to increase financial inclusion by providing small savings accounts, payment/remittance services to migrant labour, low income households, small businesses, other unorganised sector entities and other users by enabling high volume-low value transactions in deposits and payments/remittance services in a secured technology-driven environment. Those who can promote a payments bank can be a non-bank PPIs, NBFCs, corporate’s, mobile telephone companies, super market chains, real sector cooperatives companies and public sector entities. Even banks can take equity in Payments Banks. RBI received 41 applications for payments banks till 2 February 2015 which was the deadline for the same. Prominent applicants for payments bank include Reliance Industries Limited (RIL), Aditya Birla Nuvo Ltd., Future Group, UAE Exchange India, Bharti Airtel, Vodafone, IIFL, PayTM and Oxigen.
4) Finance Ministry released latest data for the Pradhan Mantri Jan Dhan Yojana (PMJDY) on 11 February 2015. According to it, a little more than 127 million new bank accounts have been opened since launch of the scheme on 28 August 2014. What is an important achievement associated with this figure? – The number of people added to the country’s banking system in the past five months is higher than that in the period from 2001 to 2011
Explanation: With opening of around 127 million bank accounts in last five months, the total number of bank accounts in the country stand at 210.5 million (21 crore). According to census data, only 36% of Indian households had access to banking services in 2001. This increased to 59% in 2011. If the latest figures for the PMJDY are anything to go by, all but 23,000 Indian households have already been made part of the banking system. However, even as the government continues to add accounts, the speed of linking the accounts with Aadhar numbers has not been as fast. Until 4 February 2015, seeding of Aadhar numbers, to ease the process of direct transfer of cash subsidies in beneficiaries’ bank accounts, had been done for 35% of all new bank accounts.
5) The RBI on 2 February 2015 directed banks to prominently display the name of unclaimed bank account holders on the websites and provide them with a “Find” option to locate the information easily. What are the present provisions for such unclaimed and inoperative bank accounts? – Banks are required to pay back the amounts laying in inoperative accounts for ten years or more, along with interest
Explanation: The banks can later lodge a claim for refund from the Depositor Education and Awareness Fund for an equivalent amount paid to the customer/depositor. This was done in a bid to help people who have unclaimed deposits lying with banks. The banks were asked to complete the action by 31 March 2015. In its directions to the banks, the RBI cautioned against disclosing the account numbers of such holders. It said that they should give information about process of claiming the unclaimed deposits or activating the inoperative account. As per government estimates, banks had Rs 5,124 crore in unclaimed deposits lying with them as on 31 December 2013.
6) Which private bank on 10 February 2015 launched first-of-its-kind digital banking service called “Pockets”, which enables users to instantly send money to any e-mail id, mobile number, friends on Facebook and bank account? – ICICI Bank
Explanation: Under the “Pockets” service, anyone including those who are not customers of ICICI Bank, can easily download the e-wallet from Google Playstore, fund it from any bank account in the country and start transacting immediately. This wallet uses a virtual VISA card which enables the users to transact on any website or mobile application in India. The universal wallet and the savings account are the first two products to be launched as part of ICICI’s ‘Pockets’ digital bank initiative.
7) The largest share sale by a private sector entity and the second largest fund-raising by selling shares in the secondary market in India took place on 5 February 2015 when a leading private bank raised Rs. 9,880 crore. Which bank is this? – HDFC Bank
Explanation: HDFC Bank sold its shares worth Rs. 9,880 crore in the secondary market on 5 February through a mix of qualified institutional placement (QIPs) and American Depository Shares (ADRs) to domestic and overseas investors. This was the largest share sale by a private sector entity and the second largest fund-raising by selling shares in the secondary market in India after the bumper Rs. 22,500-crore issue of Coal India Limited (CIL) on 30 January 2015. HDFC Bank is the largest bank in India by market capitalization.
8) State Bank of India (SBI)’s net profit for the October to December quarter for 2014-15 stood at Rs. 2,910 crore as announced by the bank on 13 February 2015. These results were cheered by the stock and financial markets of the country. Why? – SBI’s bad loans rose only slightly and its asset quality made an improvement
Explanation: SBI’s net profit rose by around 30% as compared to corresponding quarter of 2013-14. However, the markets were happier because the bank was able to improve on its non-performing assets (NPAs) during the quarter. Gross non-performing assets (NPA) as a percentage of total advances improved to 4.90% during the quarter from 5.73% in the year-ago period. Net NPA was 2.80% during the quarter, down from 3.24% in corresponding quarter of last fiscal. SBI is country’s largest bank and it controls nearly 25% of India’s banking business. Thus better results from SBI were cheered after poor results by many PSU banks earlier.
9) Union Govt. on 9 February 2015 came up with a new forecast of annual economic growth that makes India the fastest growing major economy in the world. This became possible as the system of measuring economic activities was changed recently. What is the new growth forecast for year ending 2014-15 according to this? – 7.4%
Explanation: The new estimate is sharply higher than the Reserve Bank of India’s (RBI) growth projection of around 5.5% under the old method as well as a revised 6.9% growth a year earlier. Under the new method, the economy grew 7.5% in the quarter ending in December 2014, outpacing China’s 7.3% growth in the latest quarter and making India the fastest growing major economy in the world. The apparent recovery is, however, in large measure due to changes both in the way authorities calculate gross domestic product (GDP) and the base year. India now measures GDP by market prices instead of factor cost, to take into account gross value addition in goods and services as well as indirect taxes. The base year has been shifted to 2011-12 from 2004-05. The reading, however, is at odds with other indicators such as industrial production and trade data, which suggest the economy is still suffering from slack.
10) Which country became the world’s top FDI destination during 2014 and thus replaced the United States from top place as disclosed by a latest report by United Nations Conference of Trade and Development (UNCTAD)? – China
Explanation: This UNCTAD report released on 29 January 2015 disclosed that during 2014 total foreign direct investments (FDI) or investment by foreign firms in China stood at $128 billion while the same for the U.S. stood at $86 billion. Hong Kong stood second in this list with FDI worth $111 billion. The U.S. was occupying the top position since 2003. Other countries among top 10 in this list include Singapore ($81 billion), Brazil ($62 billion), UK ($61 billion), Canada ($53 billion), Australia ($49 billion), the Netherlands ($42 billion) and Luxembourg ($36 billion).