Financial Awareness Rbi Grade B

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FINANCIAL AWARENESS FOR RBI GRADE B EXAM

- Specially compiled for Bankersadda by Mr. A.K. Gupta, Ex- Chief Manager, PNB

MARCH 2013
1. BRICS development bank initiative: Brazil, Russia, India,
China and South Africa (known as BRICS) have announced
to establish a development bank. One of the driving forces
behind the development of the BRICS bank is the desire to
increase investment in infrastructure.
2. Financial inclusion likely to be part of banking code:
According to K.C. Chakrabarty, Deputy Governor, RBI is
exploring the possibility of enshrining financial inclusion in
the Code of Banks Commitments to Customers. The Code,
which is voluntary, sets minimum standards of banking
practices for banks to follow when they are dealing with
individual customers. It provides protection to customers
and explains how banks are expected to deal with them.
3. Financial Exclusion: Out of the 6 lakh habitations in the
country, only about 36,000 have a commercial bank branch.
Just about 40 per cent of the population across the country
has bank accounts. The proportion of people having any
kind of life insurance cover is as low as 10 per cent and the
proportion having non-life insurance is abysmally low at
0.6%. People having debit cards comprise only 13%, and
those having credit cards only a marginal 2% of the
population.
4. IRDA introduces credit rating norm for selecting
foreign reinsurers: In the reinsurance business, multiple
insurance companies share the risk by purchasing
insurance policies from other insurers to limit the total loss
the original insurer would face in the case of a disaster.
According to the new IRDA norms, insurers should place
their reinsurance business outside India with only those
insurers who have a credit rating of at least BBB with
Standard & Poors, or an equivalent rating by any other
international agency for the past five years.
5. CAD will show progress in Q4: According to Prime
Ministers Economic Advisory Council Chairman C
Rangarajan, Indias current account deficit is expected to
show some improvement in the last quarter of this fiscal on
account of likely uptick in exports. CAD widened to a
historic high of 6.7 per cent of GDP in December quarter to
$32 billion on account of surge in oil and gold imports,
besides weak exports. It was at $20 billion (4.4 per cent of
GDP) in the corresponding quarter of last fiscal. CAD is the
difference between inflow and outflow of foreign funds.
6. Create single investor class for foreigners: According to
Financial Sector Legislative Reforms Commission (FSLRC),
has advocated for a single unified investor class to be called
qualified foreign investors (QFI), which will reduce
uncertainty, compliance costs and time taken for foreigners
to invest in India. Currently, multiple investment vehicles
such as foreign institutional investors (FIIs), foreign
venture capital investors (FVCI) and qualified foreign
investors (QFI) are in place in India.
7. Italys finance system stable, but risks remain:
According to IMF, Italys finance system remains stable, but
remained at risk from continuing weakness in the economy.
8. Cyprus rescued: Cyprus has been pulled back from the
brink of a likely banking sector default.
9. Check firms raising public money promising high
returns: The Securities and Exchange Board of India has
urged the Centre to set up a single regulator to monitor
companies, which raise public funds in lure of high returns.
10. SEBI does away with physical filing of KYC documents
to KRAs: To streamline the process of Know Your Client
procedures, market regulator SEBI has done away with the
submission of physical documents by investors to the KYC
Registration Agencies (KRAs) in favour of the electronic
format only. The intermediaries, including mutual funds,
would need to submit scanned copies of investor
documents to the KRAs and retain the physical documents
with themselves. However, the physical documents would
need to be submitted, whenever KRAs demand them.
11. Food will be last in chain of schemes for direct transfer:
According to K.V. Thomas, Union Minister for State for
Consumer Affairs, Food and Public Distribution, food items
will be the last to be brought under the Direct Cash
Transfer scheme.

12. Cards top customer complaints in banks: The Banking
Ombudsman Annual Report for 2011-12 released in
January shows at least 14,492 bank customers had card-
related complaints during this period, 9,350 of which
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pertained to ATM/debit cards alone. At least half the cases
came from three major banks SBI, ICICI Bank and HDFC
Bank.
13. One super regulator proposed: The Financial Sector
Legislative Reforms Commission (FSLRC) headed by Justice
(retd) B.N.Srikrishna has recommended that regulatory
bodies such as SEBI, the Forward Markets Commission, the
Insurance Regulatory and Development Authority and
PFRDA should be subsumed into a new unified regulatory
agency. However, for the time being, Reserve Bank of India
should not be brought under the 'unified regulator'.
14. Reliance Ind paid $78.8-m fine for falling gas output
over 3 years: Penalty is for failing to meet its
commitments under the production sharing contract over
the last three years (2009-10 to 2011-12).

15. RBI Governor for corrective steps to prevent money
laundering: According to Dr D Subarao, banking systems in
India are largely safe. However, there is a need for some
corrective action and based on the findings of the
investigation, these will be taken. The countrys three
largest private banks ICICI bank, HDFC Bank and Axis
Bank were accused of indulging in money laundering
both within and outside by an online portal, Cobrapost.
16. Current fiscals exports will be lower than last years:
According to Commerce and Industry Minister Anand
Sharma, Indias exports in the current year may fall below
last years figure and trade deficit could rise to $196 billion.
Exports had declined for eight straight months starting May
2012 mostly due to contraction in demand in the EU and
the US.
17. To improve cover, IRDA looking at two-year policies: To
plug the problem of a large number of vehicles running
without cover, the Insurance Regulatory Development
Authority is pitching to make motor third party insurance
policies valid for two years, from the existing one-year
term.
18. ING Vysya Life is now subsidiary of Exide Ind: Exide
Industries has bought out three other partners holding 50
per cent stake in ING Vysya Life Insurance Co Ltd (IVL)
26 per cent of ING Group, 16.32 per cent of the Hemendra
Kothari Group and 7.68 per cent from the Enam Group. ING
Vysya Life Insurance Co has now become a wholly-owned
subsidiary of Exide.
19. Moneylender-free village: Canara Bank has taken move
by declaring Kunjupannai village in Nilgiris district a
moneylender free village. The bank, in the first phase,
extended credit to around 90 people. The advance was only
to swap their debt, and the maximum loan per individual
did not exceed Rs 20,000 and was given at 4 per cent.
20. Life insurers to have standard form for policyholders:
To bring about uniformity and transparency in policies sold
by life insurers, the Insurance Regulatory and Development
Authority (IRDA) has asked all life insurers to adopt a
standard Application form for policyholders seeking
insurance cover. Further, it requires insurers, agents and
brokers to sign on the recommendations they make to the
customers, thereby putting the onus of selling the insurance
product on them. The regulation applies to all individual
policies issued by life insurance companies irrespective of
segment and type of product.
21. Unsafe water kills 1,800 kids every day worldwide: UN
report: According to a UN Report, nearly 2,000 children
around the globe, under the age of five, die every day from
diseases linked to unsafe water, poor sanitation and
hygiene, with 24 per cent of the deaths occurring in India
alone.
22. TRAI asks TV channels to restrict ad duration: The
Telecom Regulatory Authority of India (TRAI) has made it
mandatory for broadcasters to restrict the duration of
advertisements in their channels to a maximum of 12
minutes of any given hour.
23. Govt issues norms for setting up of manufacturing
zones: To promote manufacturing in the country, the
Government has issued norms for setting up of National
Investment and Manufacturing Zones (NIMZs) with a host
of benefits. There will be exemption from capital gains tax
on sale of plant and machinery of a unit located in a NIMZ.
The tax break will be granted in case of re-investment of
sale consideration within a period of three years for the
purchase of new plant and machinery in any other unit
located in the same NIMZ or another NIMZ. Besides, NIMZs
will be eligible for viability gap funding, which cannot
exceed 20 per cent of the project cost. The developers of
NIMZs will be allowed to raise funds through external
commercial borrowings (ECBs) for developing the internal
infrastructure of NIMZs. Soft loans from multilateral
institutions will be explored for funding infrastructure
development in NIMZ. Assistance would be provided for
negotiating non-sovereign multilateral loans by providing
back-to-back support. NIMZs are conceptualised as
integrated industrial townships of at least 50 sq km (5,000
hectares) with latest infrastructure. At least 30 per cent of
the total land area would be devoted to manufacturing
units. The National Manufacturing Policy, aims at enhancing
the share of manufacturing in GDP to 25 per cent within a
decade and creating 100 million jobs.
24. Govt receives proposals from 4 PSUs for Navratna
status: These are Engineers India Ltd, Rashtriya Chemicals
and Fertilisers Ltd, National Hydro Power Corporation
(NHPC) Ltd and Mazagaon Dock Ltd. The coveted tag
empowers the Board of a central PSU to take investment
decisions of up to Rs 1,000 crore in a joint venture project
or wholly-owned subsidiary. At present, there are 14
Navratna CPSEs such as NMDC and Oil India Ltd; and 7
Maharatna companies including BHEL, GAIL and CIL.
25. 30 banks ready for change to risk-based supervision
system from April 1: The new system will bring in a
uniform methodology to check the health of the banking
system, as against the CAMELS framework used at present
which follows a compliance-based and transaction-testing
approach.

26. SIDBI signs tripartite MoU with Egyptian body, World
Bank: Small Industries Development Bank of India (SIDBI)
has signed a tripartite Memorandum of Understanding
(MOU) with Social Fund for Development (SFD) Egypt and
the World Bank. According to Sushil Muhnot, Chairman &
Managing Director, SIDBI, under the MOU, SIDBI and its
associates will provide consultancy for three year period to
SFD and establish credit guarantee system for micro, small
and medium enterprises in Egypt.
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27. Cyprus Parliament rejects bank levy plan of Eurozone
ministers: The Cypriot Parliament rejected a bank levy
plan agreed by the Eurozone finance ministers as part of a
10 billion ($13 billion) bailout package for the cash-
strapped nation. The plan was to impose a one-off levy on
all bank accounts on the island. The compromise formula
spared small savers up to 20,000 from the proposed bank
levy and to impose a one-time levy of 6.75 per cent on
deposits between 20,000 and 100,000. Deposits above
that level are to be charged 9.9 per cent as agreed by the
finance ministers. The bank levy plan is intended to raise a
revenue of 5.8 billion.
28. SEBI issues colour codes, product labelling for mutual
funds: Market regulator SEBI has issued a framework on
product labelling with colour coding for mutual funds, that
would help investors assess the risk associated with the
schemes. The guidelines would be effective from July 1,
2013, for all existing and forthcoming schemes. Product
labels carrying details about the schemes would be
disclosed on the front page of initial offering application
forms. Besides, the labels would have to be placed in
common applications forms and advertisements. A blue
colour coded box would indicate low risk, yellow would
signify a medium risk, while brown represent schemes with
high risk.
29. Discoms being rated for first time: For the first time, the
State Electricity Distribution Utilities (Discoms) have been
rated on the basis of seven parameters including financial
status, meeting regulatory norms and others. The
'integrated ratings' are on annualised basis and spread
from A+ to C (A+ is best and C is the minimum). It would
provide a tool to banks and financial institutions to
calculate their business risks. Ratings would cover year-on-
year comparison of AT&C losses, regulatory environment,
payments of subsidy and cross subsidy, quality of accounts,
assets created, automated pass-through of fuel cost, short-
term power purchase, debt servicing and RPO compliance,
among others. Out of the 39 Discoms rated, Gujarat's four
utilities scored the best rating of A+. The worst rated
utilities are from UP.
30. India is fourth largest energy consumer in the world:
According to a Report by US Energy Information
Administration (EIA), India has emerged the fourth largest
energy consumer of the world after the US, China and
Russia, but its per capita energy consumption remains
lower than that of developed countries.
31. Revised Food Bill proposes uniform 5 kg per head
foodgrain subsidy: Nearly 67 per cent of population will
get 5 kg of foodgrain per month at subsidised prices, once
the National Food Security Bill (NFSB) gets approval from
Parliament. The price for providing foodgrains will be
initially valid for the first three years of implementation of
the Act and after that it will be linked to Minimum Support
Price. There is no change of entitlement for 2.43 crore
poorest of poor families under the Antyodaya Anna
Yojana, which is 35 kg per household per month. The Bill
aims to cover 75 per cent of rural population and 50 per
cent of the urban population.
32. NPAs - Real problem is road, power sectors: According
to Finance Minister P. Chidambaram, over 215 projects are
stalled, with an investment of Rs 7 lakh crore, and bank
loans of about Rs 54,000 crore in sectors such as power,
coal, iron, steel and road transport. The real problem is in
roads and power sectors. There are 68 new projects in the
road sector and 40 in the power sector.
33. Deadline for new format cheques extended to July: RBI
has extended the deadline for mandatory use of new format
cheques to July 31, 2013.

34. Basel-III to increase pressure on Indian banks to raise
capital: According to a Standard & Poor's Ratings Services
report, higher capital requirement under Basel-III would
increase the pressure on Indian banks to raise capital.
Banks may need Rs 2.6 lakh crore of additional capital by
2018 as they strive to meet Basel-III requirements. Indian
banks will require minimum additional capital of about Rs
69,100 crore to meet the Reserve Bank of Indias 8 per cent
requirement for the common equity tier-1 and capital
conservation buffer ratio.
35. Bill in Lok Sabha to set up 20 more IIITs: The new IIITs
would be set up under the public-private partnership mode,
with the HRD Ministry, the State Governments where these
are to be established and the industry being partners. The
establishment of each IIIT is expected to cost Rs 128 crore,
with the Centre bearing 50 per cent of the cost and the State
Government concerned 35 per cent. The remaining 15 per
cent would be borne by industry partners.
36. Near 20% rural wage hike pushing up inflation:
According to Assocham, near 20 per cent annual increase in
rural wages is building up price pressure on food articles
such as cereals, rice and wheat.
37. Public sector banks yet to recover loans of Rs 1 cr and
above worth Rs 68 K cr: 7,295 individual borrowers or
companies, who took loans of Rs 1 crore and above, had an
outstanding of Rs 68,262 crore from about 27 public sector
banks as of March, 2012.
38. India has too many labour regulations: According to
Raghuram Rajan, Chief Economic Adviser in the Finance
Ministry, India has the least number of workers protected
under law in the world even as the countrys labour market
has too many regulations.
39. BRIC output to exceed GDP of US, European nations by
2020: According to the 2013 Human Development Report,
prepared by United Nations Development Programme
(UNDP), the combined output of BRIC countries including
India will surpass the aggregate GDP of US, Canada and
other European nation by 2020. Indias position in Human
Development Index was 136 out of 187 countries in 2012. It
ranked 134 in 2011.
40. Agricultures share in GDP may fall to 13.7% in FY13:
on account of higher growth in the non-farm sectors. The
contribution of agriculture and allied sector to the Gross
Domestic Product of the country declined from 14.6 per
cent in 2009-10 to 14.5 per cent in 2010-11 and further to
14.1 per cent in 2011-12.
41. SBI Life launches eShield: SBI Life has launched eShield,
an online term insurance plan. It can be purchased directly
through the companys Web site. The minimum entry age is
18 and the maximum is 30 years. The annual premium for a
life insurance cover of Rs 1 crore is Rs 6,360.

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42. IRDA forms panel to review insurance broker norms:
Insurance Regulatory and Development Authority (IRDA)
has constituted a committee headed by Suresh Mathur,
Senior Joint Director, IRDA, to review the entire insurance
brokers regulations, 2002. At present, there are 345
insurance brokers who were issued licence by the
regulator. The licence is valid for three years from the date
of issue.
BRIEF PROFILE Mr. A. K. GUPTA
1. Shri A.K. Gupta is a post graduate in commerce,
LL.B, CAIIB, PG Dip in Personnel Management and
IR, PG Dip in Marketing and Management, PG
Diploma in Training and Development, Cert in
Industrial Finance;
2. Ex- Chief Manager, Punjab National Bank with an
experience of more than 28 years as a banker;
3. Experience of more than 12 years in training in the
banks training college (Principal for 5 years);
helped thousands of bankers in their banking
career;
4. Has been examiner with Indian Institute of
Banking & Finance (IIBF, Mumbai) for about 5
years;
5. Remained associated with number of management
institutions at MBA level including Masters of
Finance, University of Delhi, International
Management Institute Conducted programmes in
the area of Asset Liability Management and Credit
risk management for top management executives
in the rank of Chief General Manager/General
Manager/DGM/ AGMs of SIDBI, Central Bank of
India, Dena Bank, Punjab & Sind Bank
6. Was a student of University of Manchester for 3
months for an advanced programme in
Development Banking.

43. No plans to list public sector general insurers now: The
Centre has no immediate plans to list any of the four non-
life public sector general insurance companies. All the four
non-life public sector insurance companies have been
incurring underwriting losses over a period of time.
44. Jorge Mario Bergoglio elected as Pope Francis I:
Argentinas Jorge Mario Bergoglio was elected Pope Francis
I, becoming the churchs first Latin American pontiff after a
conclave to elect a leader of the worlds 1.2 billion
Catholics.
45. Direct benefit transfer scheme will go pan-India by year
end: According to Finance Minister P. Chidambaram, the
direct benefit transfer scheme will be implemented across
the country by end of the year.
46. PFRDA allows subscribers lump sum withdrawal on
exit: as against the current practice of phased withdrawals
every year. Under the Deferred withdrawal facility, the
subscribers at the time of exit from NPS can exercise the
option to defer withdrawal of eligible lump sum withdrawal
and stay invested in the NPS. However, no fresh
contributions will be accepted and also no partial
withdrawals will be allowed during such a period of
deferment. The subscriber can withdraw the deferred lump
sum amount at any time before attaining the age of 70 years
by giving a withdrawal application or notice.
47. Indias demand for milk likely to touch 210 mt by 2020-
21: According to National Dairy Development Board
(NDDB) Chairman Amrita Patel, with increased income
levels, Indias demand for milk is expected to go up to 200-
210 million tonnes by 2020-21. Indias milk production has
been growing at over 4 per cent annually compared to the
growth in world milk production which is 2.75 per cent. Per
capita availability of milk has also increased to 290 grams
per day, which is comparable with world per capita
availability of 289 grams per day.
48. Money laundering by 3 top private banks: According to
Cobrapost, online portal, executives at some branches and
insurance affiliates of the countrys top three private sector
banks ICICI Bank, HDFC Bank and Axis Bank, had offered
to convert politicians black money (or tax-evaded income)
into white (legitimate income).
49. SBI chief pitches for FDs of 3 days: SBI Chairman has
advocated the minimum tenure of fixed deposits at three
days so that companies find it worthwhile to park short-
term surplus funds with banks. Further, 2 per cent interest
be paid on their current accounts. At present, firms prefer
parking surplus funds with the liquid/money market
schemes of mutual funds because of the flexibility of no
lock-in period and redemption in 24 hours.
50. Minimum net-owned funds of Rs 50 lakh must for
money transfer business: According to the Reserve Bank
of India, Indian agents intending to get into the money
transfer business will need to have minimum net-owned
funds of Rs 50 lakh. Further, collateral equivalent to three
dayss average drawings or $50,000, whichever is higher,
may be kept by the Overseas Principal in favour of the
Indian Agent with a designated bank in India.
51. RBI asks urban cooperative banks to implement CBS by
Dec 31: RBI has asked Urban Co-operative Banks (UCBs) to
implement core banking solutions (CBS) in all their
branches by December 31, 2013.
52. KYC norms to be enforced on jewellery trade: The
Government has expanded the purview of the anti money-
laundering law to enforce know your customer (KYC)
norms for retail purchases of gold and precious stones. All
dealers in precious metals and stones will have to comply
with KYC requirements for transactions beyond a limit
(likely to be Rs 50,000). Currently, tax collection at source
of one per cent is applicable on jewellery sales above Rs 5
lakh.
53. Factory output rises 2.4% in January: The Index of
Industrial Production (IIP) of 2.4 per cent in January 2013
was better than the one per cent growth seen in same
month last year.
54. High food prices push up retail inflation to 10.91% in
Feb: This is higher than the annual consumer price index
(CPI) inflation of 10.79 per cent recorded in January.
55. Govt to launch Rs 10 plastic notes in 5 cities: The
government and the RBI have decided to introduce one
billion pieces of Rs 10 notes in polymer/plastic on a field
trial basis in five cities Kochi, Mysore, Jaipur,
Bhubhaneswar and Shimla with varied geographical
locations and climatic conditions. While the primary
objective of introduction of polymer notes is to increase its
life, it could also help in combating counterfeiting.
56. Rajya Sabha passes SEBI Bill for appointing SAT head:
The Bill seeks to include the criterion of appointing a
retired High Court judge having held the position for seven
years for heading the Securities Appellate Tribunal (SAT), a
statutory body that adjudicates on appeals against orders
passed by SEBI. As per the existing criteria, only a serving
or retired Supreme Court judge or Chief Justice of a High
Court can head the Tribunal.
57. Subsidy on rice and wheat under targeted public
distribution system (TPDS) touches Rs 80,491 cr: The
subsidy on rice was Rs 36,540 cr as of March 6, 2013, while,
that on wheat was Rs 43,951 crore.
58. World Bank sees 6% plus growth for India in 2013-14:
According to World Bank Chief Jim Young Kim, India had
made an extraordinary contribution to the global economy,
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with its share in the global economy almost doubling in five
years (2005-2010). India is World Bank groups largest
client. Between 2009 and 2013, the group had extended
around $25.5 billion loans to India. This includes $12 billion
from the International Bank for Reconstruction and
Development, $8.3 billion from the International
Development Association and $5.2 billion in investments
from the International Finance Corporation.
59. Exports growth perks up in Feb as markets in EU, US
look up: Exports posted a growth of 4.25% to $26.26
billion in February 2013 while Imports grew at a slower
pace of 2.6% to $41.18 billion. In the April-February 2012-
13 period, exports dropped four per cent to $265.95
($277.1 billion). Imports in the same period grew
marginally at 0.25 per cent to $448.04 billion ($446.9
billion). Trade deficit, as a consequence, increased to
$182.1 billion ($169.8 billion).

60. Norms issued for unit-linked insurance products:
According to the guidelines notified by IRDA, Independent
rating agencies will now be allowed to evaluate unit linked
insurance funds of insurance companies to help
policyholders better assess and compare insurance
products. The information will give policyholders clarity on
operational practices, fund management quality, and
organisational strength of life insurers. IRDA has asked life
insurers to disclose the reduction in yield (refers to the
lowering of return of a fund on account of the various
charges) on a monthly basis to customers of unit linked
products. The regulator has capped the reduction in yield at
4 per cent for policies with five-year tenure, 3 per cent for
10-year tenure and 2.25 per cent for more than 15 years.
For a premium paying term of 5 years, commission for
agents cannot exceed 15 per cent in the first year, 7.5 per
cent in the second year and 5 per cent from the third year
onwards. If a premium payment is discontinued by the
policyholder, the regulator has prescribed a minimum
guaranteed interest rate at 4 per cent on such premiums
parked in the discontinued fund.
61. 17 lakh in race for 1,500 officer posts in SBI: Despite
being the best bank employer, in terms of perks and
growth opportunities, SBI went beyond the ritual
notification to advertising extensively. SBI is offering for the
post a maximum salary of up to Rs 69,000 a month in
Mumbai, while it would be around Rs 50,000 in other
places.
62. Govt to bear up to 8% interest on short-term loans of
fertiliser cos: Government will make a special banking
arrangement (SBA) of Rs 5,000 crore allowing fertiliser
firms to raise short term loans through a consortium of
public sector banks against the subsidy payments that are
pending.
63. Committee to suggest steps to cut transaction cost of
exports: According to exporters, the quantum of
transaction cost is about 7-10 per cent of the total value of
Indian exports. This amounts to $15 billion.
64. Sanjiv Misra takes over non-executive Chairman of Axis
Bank: Sanjiv Misra, former Secretary, Department of
Expenditure, Ministry of Finance, has taken over as the
Non-Executive Chairman of AXIS Bank Ltd.

65. Panel set up to prepare blueprint for womens bank: A
six-member committee under the chairmanship of M. B. N.
Rao, former Chairman and Managing Director of Canara
Bank, has been set up to prepare a blueprint for the first all-
womans bank. The other members of the committee are:
M. D. Mallya, Ex-CMD, Bank of Baroda; Jayshree Vyas,
Managing Director, SEWA; Arundhati Bhattacharya, MD and
CEO, SBI Caps; Usha Ananthasubramaniam, Executive
Director, Punjab National Bank; and K. Ramakrishna, Chief
Executive, Indian Banks Association. The bank is expected
to start functioning from November.
66. International debit/credit cards only on demand: At
present, almost all banks issue cards that have international
acceptability. To minimise misuse of such cards, RBI has
asked banks to withdraw this automatic facility and replace
it by on-demand facility by June 30, 2013. From July 1,
2013, cards issued in India will not function abroad unless
it has been activated specifically for international
withdrawals and payments to parties abroad at the specific
request of the accountholder.
67. Four regulators to jointly supervise financial
conglomerates: The four financial sector regulators in the
country have signed a Memorandum of Understanding
(MoU) for co-operation in the field of consolidated
supervision and monitoring of financial groups identified as
financial conglomerates. The regulators which have signed
the MoU are: Reserve Bank of India, Securities and
Exchange Board of India, Insurance Regulatory and
Development Authority, and Pension Fund Regulatory and
Development Authority. Financial conglomerates undertake
a range of financial activities, including commercial
banking, insurance, investment banking, equity broking,
and pension business. Some examples of banking
conglomerates are: State Bank of India, Punjab National
Bank, Canara Bank, Bank of India, and Bank of Baroda
(public sector banks); ICICI Bank, HDFC Bank, Axis Bank
and Kotak Mahindra Bank (private sector banks); and
Standard Chartered Bank, Citibank and HSBC (foreign
banks).
68. Inflation indexed bonds to be first introduced for
institutional investors: However, no decision has yet been
taken as to whether indexation should happen with
wholesale price index (WPI) or consumer price index.
Inflation indexed bonds, which found mention in recently
announced 2013-14 Budget, are seen as an attempt to raise
household savings and wean away Indians from gold.
69. Cabinet approves Bill for time-bound services to
citizens: All services provided by both the Centre and the
State Governments will be extended to citizens in a time-
bound manner under the Bill. The Bill envisages penalty of
up to Rs 50,000 against a Government official failing to
provide his or her duties. It lays down an obligation upon
every public authority to publish a citizens charter, stating
the time within which specified goods will be supplied and
services be rendered and provides for a grievance redressal
mechanism for non-compliance of its provisions. The Bill
also mandates a public authority to establish a call centre,
customer care centre, help desk and peoples support
system to ensure the time-bound delivery of services.
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70. Govt targets 60 cr Aadhaar registrations by 2014-end:
So far 28.78 crore Aadhaar numbers have been generated.
71. About 30% people were below poverty line in 09-10:
About 30 per cent of people in India were below the
poverty line in 2009-10 that was based on the monthly per
capita consumption expenditure (MPCE) of Rs 673 for rural
areas and Rs 860 for urban areas.
72. Share of Indias goods exports rises to 17.7% of GDP:
Despite a slowdown in global demand for goods, the share
of Indias merchandise exports has increased to 17.7% cent
in 2011-12 from 13.9% in 2009-10.
73. CVC gets over 7,200 corruption complaints in 2012: CVC
acts as an advisory body and only tenders its advice in
individual cases of corruption on a reference made by
Central Government ministries, departments or
organisations under its purview.
74. Credit card frauds rise to 1,590 in Dec quarter:
involving an amount of Rs 948.64 lakh.
75. Rise in Gross NPAs of PSBs: The gross non-performing
assets (NPAs) of the public sector banks (PSBs) has
increased from Rs 71,080 crore as on March 2011 to Rs
1,12,489 crore as on March 2012. As on December 2012,
the gross NPAs of the public banks rose to Rs 1,55,839
crore. As of December 2012, gross NPA (GNPA) ratio stood
at 3.69 per cent, GNPA ratio in agriculture at 5.20 per cent,
GNPA ratio in retail loans at 2.73 per cent and GNPA ratio in
corporate lending stood at 3.41 per cent.

76. ONGC retains top slot among PSUs, BSNL worst
performer: ONGC has retained the top position in the
coveted list of 10 most profit-making PSUs, while BSNL was
the biggest loss-making state-run company in 2011-12.
ONGC earned a net profit of Rs 25,122 crore in 2011-12.
BSNL, on the other hand, suffered losses of Rs 8,850 crore
in the same period.
77. Parekh panel for hiking banks sectoral cap for power
sector: To channelise liquidity into the power sector, a
proposal is being mooted for increasing the sectoral
exposure limit of commercial banks and financial
institutions to the power sector to 20 per cent.
78. MNREGA workers to get more wages: From April 1, the
maximum daily wage of Rs 214 has been fixed for Haryana,
while Bihar, Sikkim, Tripura, Nagaland and Arunachal
Pradesh will get the minimum of Rs 135. The MNREGA
wage rate is linked to the Consumer Price Index for
Agricultural Labour (CPIAL) from April 1 every year.
79. Insurance Information Bureau signs MoU with Korean
body: IIB collects transaction-level data of policies and
claims under health, motor and other lines of business and
has been generating reports on the basis of the analysis of
the collected data and assists IRDA through provision of
inputs.
80. Over Rs 22,636 cr lying in inoperative accounts in
EPFO:
81. Over 3.5 lakh cases pending in consumer courts: Of
these, 94,330 cases are pending in State Commissions and
2,47,733 cases in District Fora. Maximum number of cases
are pending in Uttar Pradesh, Maharashtra, Rajasthan and
Gujarat.
82. Senior citizens feel the pinch as banks reduce extra
interest on fixed deposits: SBI and PNB, reduced the
premium on senior citizens fixed deposits from 50 basis
points to 25 basis points.
83. Impose limit on global transactions of cards: In order to
check frauds, the RBI has asked banks to impose a
monetary limit for international transactions on credit and
debit cards. A monetary limit of $500 be imposed by the
issuing bank on all global cards which have not been used
in the past.

APRIL 2013
1. Who are members of BRICS?: Brazil, Russia, India,
China and South Africa
2. What is Code of Banks Commitments to Customers?: The
Code, which is voluntary, sets minimum standards of
banking practices for banks to follow when they are
dealing with individual customers.
3. What is likely to be included in the part of Code of Banks
Commitments to Customers?: Financial Inclusion.
4. In India, what is the proportion of people having any kind
of life insurance cover?: 10 per cent.
5. In India, what is the proportion of people having any kind
of non life insurance cover?: 0.6%.
6. How much percentage of Indian population has credit
card? 2%
7. Which country was recently rescued from the brink of a
likely banking sector default?: Cyprus
8. In which area highest number of complaints were
reported to the Banking Ombudsmans?: Card related
complaints.
9. The Financial Sector Legislative Reforms Commission
(FSLRC) was headed by: Justice (retd) B.N. Srikrishna
10. What is the recommendation of FSLRC regarding
regulatory bodies: Bodies like SEBI, the Forward
Markets Commission, the Insurance Regulatory and
Development Authority and PFRDA should be
subsumed into a new unified regulatory agency.
However, for the time being, Reserve Bank of India
should not be brought under the 'unified regulator'.
11. ING Vysya Life is now subsidiary of which company:
Exide Industries.
12. According to a UN Report, how many children around the
globe, under the age of five, die every day from diseases
linked to unsafe water, poor sanitation and hygiene?:
2,000 (24 per cent of the deaths occurring in India
alone).

13. The National Manufacturing Policy, aims at enhancing the
share of manufacturing in GDP to: 25 per cent within a
decade.
14. Market regulator SEBI has issued a framework on
product labelling with colour coding for: mutual funds.
A blue colour coded box would indicate low risk,
Page 7 of 19

yellow would signify a medium risk, while brown
represent schemes with high risk.
15. Who is the largest energy consumer in the world?: US,
followed by China, Russia, India.
16. How much food grain is to be given at subsidized price as
per revised Food Bill?: 5 kg per head
17. RBI has extended the deadline for mandatory use of new
format cheques to: July 31, 2013.
18. The contribution of agriculture and allied sector to the
Gross Domestic Product of the country declined from 14.6
per cent in 2009-10 to 14.5 per cent in 2010-11 and
further to 14.1 per cent in 2011-12 and may fall to ____in
FY13: 13.7%
19. What is the name of online insurance plan introduced by
SBI Life?: eShield
20. Urban cooperative banks to implement CBS by: Dec 31,
2013.
21. Minimum net-owned funds for money transfer business:
Rs 50 lakh. Further, collateral equivalent to three
dayss average drawings or $50,000, whichever is
higher, may be kept by the Overseas Principal in
favour of the Indian Agent with a designated bank in
India.
22. Rs 10 plastic notes to be issued in: Kochi, Mysore,
Jaipur, Bhubhaneswar and Shimla.
23. Committee to suggest steps to cut transaction cost of
exports: According to exporters, the quantum of
transaction cost is about 7-10 per cent of the total
value of Indian exports. This amounts to $15 billion.
24. Panel set up to prepare blueprint for womens bank to be
headed by: M. B. N. Rao, former Chairman and
Managing Director of Canara Bank.
25. International debit/credit cards to be issued only on
demand and not automatically with effect from: July 1,
2013.
26. Four regulators to jointly supervise financial
conglomerates are: Reserve Bank of India, Securities
and Exchange Board of India, Insurance Regulatory
and Development Authority, and Pension Fund
Regulatory and Development Authority.
27. As per Bill for time-bound services to citizens approved
by Cabinet, what is the penalty for not providing service
in stipulated time: up to Rs 50,000.
28. Number of persons below poverty line in 2009-10: About
30%. It is based on the monthly per capita
consumption expenditure (MPCE) of Rs 673 for rural
areas and Rs 860 for urban areas.
29. Share of Indias goods exports in GDP in 2011-12: 17.7%
of GDP
30. Which state gives maximum wages under MNREGA:
Haryana; From April 1, the maximum daily wage of Rs
214 has been fixed for Haryana, while Bihar, Sikkim,
Tripura, Nagaland and Arunachal Pradesh will get the
minimum of Rs 135.
31. The MNREGA wage rate is linked to: Consumer Price
Index for Agricultural Labour (CPIAL).
32. Who is the Secretary in the Department of Financial
Services (DFS): Rajiv Takru
33. The Deputy Governor of RBI appointed in Jan 13: Urjit
Patel.
34. Who is chairman of 14
th
Finance Commission: Dr Y.V.
Reddy
35. What is the mandate for 14
th
Finance Commission:
Besides the tax-sharing formula between the Centre
and the States, the panel has been mandated to look
into the pricing of public utility services such as
drinking water, irrigation and power and public
transport so as insulate them from policy fluctuations
through statutory provisions.
36. India Mortgage Guarantee Corporation is subsidiary of:
National Housing Bank (NHB).
37. Per capita availability of milk has increased to: 290
grams per day, which is comparable with world per
capita availability of 289 grams per day
38. Who has been appointed as President of Asian
Development Bank Board?: Takehiko Nakao
39. Which bank has discontinued Free Accident Insurance
recently?: SBI will discontinue a free accident
insurance cover given to its home and car loan
customers from July 2013.
40. Direct Benefit Transfer Scheme will be expanded to how
many districts from July 13: 78

MAY 2013
1. RBI plans open market operations: According to Deputy
Governor, H.R. Khan, RBI is looking at conducting open
market operations (OMO) after assessing the Government's
cash balance. Liquidity within the banking system still
remains tight as the daily liquidity borrowings by banks
under the RBI's Liquidity Adjustment Facility is close to
about Rs 1 lakh crore.
2. Banks to fund road developers if at least 80% land is
tied up: Till now, lenders had been insisting that the
developers take complete control of the land before getting
funds. As on March 2012, banks had lent Rs 114,000 crore
to the road sector, which is 18.5 per cent of the total bank
exposure to infrastructure.
3. MFI lending rose 13% last fiscal: According to
Microfinance Institutions Network data, the gross loan
portfolio of microfinance institutions (MFIs) has increased
23 per cent in 2012-13 compared to negative of 14 per cent
in 2011-12. The loan disbursals during the year grew by 13
per cent compared to the previous year. Tamil Nadu now
has the largest number of microfinance institutions among
all States, while in terms of branch network, West Bengal
tops. Andhra Pradesh, West Bengal, Tamil Nadu, Karnataka
and Maharashtra accounted for 64 per cent of the gross
loan portfolio.
4. FinMin, IRDA in talks to raise LIC's equity investment
cap: The Finance Ministry has been pitching for an increase
in the equity investment limit to 30%. The IRDA, in
February 13, raised the equity investment cap for all
insurance companies, including LIC, from 10% to 15%.
5. House panel for separate body to monitor public
deposits: A Parliamentary panel has suggested that the
Finance Ministry set up a co-ordination body to monitor
public deposits till any regulatory action on the basis of
recommendations given by Financial Sector Legislative
Reforms Commission is finalized. The body should consist
of representatives of the Reserve Bank of India (RBI), the
Page 8 of 19

Securities and Exchange Board of India (SEBI), the Ministry
of Corporate Affairs and State Governments. At present,
NBFCs are regulated by RBI, while chit funds are regulated
by State Governments. Nidhi funds fall under the Ministry
of Corporate Affairs domain, and the Collective Investment
Scheme is governed by SEBI regulations.
6. UIDAI launches 3 Aadhaar-enabled services,
permanent enrolment centres: After the launch, people in
need of an Aadhaar number can go to permanent enrolment
centres, where they will get not just e-Aadhaar numbers for
Rs 10, but can also get a unique identity number to any new
addition in the family, besides updating biometric or
demographic data by paying Rs 15. The Aadhaar Kendras
will be located in Common Service Centres or Government
Buildings in block/mandal/tehsil/taluka or municipal ward
offices. Three Aadhaar-enabled services have been
launched, including e-KYC, OTP (one-time pin)
authentication and Iris authentication. The e-KYC service
will enable individuals to authorise service providers to
receive electronic copies of their proof of identity and
address. This service can be deployed by agencies to verify
a residents identity and address. Only demographic
information (name, address, date of birth, gender,
photograph and mobile number) that is collected during
Aadhaar enrolment will be shared, at the request of, and/or
with the consent of the number holder. However, the
information will be available only for a few seconds to the
service provider to avoid misuse.
7. SBI ties up with Spanish bank: State Bank of India has
entered into a tie up with Spanish bank Banco Bilbao
Vizcaya Argentaria, SA (BBVA) to develop business
operations in Latin America and Spain. BBVA is the second
largest bank in Spain.
8. Overseas offices of Indian Insurance companies:
According to the guidelines issued by the Insurance
Regulatory and Development Authority (IRDA), Indian
insurance companies can open offices overseas subject to
following conditions (a) minimum of three years of
operation; (b) minimum net worth of Rs 500 crore in case
of life insurers and Rs 250 crore in case of general insurers,
and Rs 750 in case of reinsurers; (c) good financial health
and profits for three years in the last five years from the
date of application to the regulator, with prescribed
solvency ratios.
9. Nabard suggests three-way joint venture for womens
bank: According to Nabard, the womens bank, mooted in
the Union Budget for FY2014, should be floated as a joint
venture between the Government, five-six major public
sector banks and a development financial institution. The
Government should hold 26 per cent stake in the proposed
bank, which will be run by women exclusively for women,
while public sector banks and Nabard will together hold 74
per cent. The objective of the proposed bank, as outlined by
the budget, will be to lend mostly to women and women-
run businesses, support women self-help groups and
womens livelihood, employ predominantly women, and
address gender related aspects of empowerment and
financial inclusion.
10. Developers gear up to tap ECB route for affordable
housing: The Reserve Bank of India has allowed developers
and housing finance companies to raise a maximum of $1
billion for affordable housing. Besides saving on interest
cost, the window gives developers an alternative route to
raise funds at a time when they are facing a liquidity crunch
with little or no access to project finance through domestic
sources. The all-in costs including hedge costs through this
route works out to be below 10%.

11. American Express rolls out unique rewards plan for
mid-sized firms: In a first- of- its-kind initiative, American
Express has come up with a reward programme that seeks
to provide reward points to companies as against the
individual users of its cards. Under this programme, reward
points earned on corporate spends such as travel and
entertainment will accrue to the company and not the
employees who are spending.
12. Shashi Kant Sharma is new CAG: Shashi Kant Sharma has
assumed charge of the Constitutional post at the CAG office.
He will have tenure up to September 24, 2017. Prior to
becoming CAG, Sharma was Defence Secretary.
13. Local goods sans excise at duty-free shops: As per Govts
decision to promote brand India, excise-free India-made
goods will be available at duty-free shops (DFS) in
international airports in the country. Prior to this,
indigenous goods were sold in the arrival halls of
international airports in the country, but were not duty-
free, unlike imported goods. A passenger arriving from
abroad or leaving the country will now have the choice to
buy either duty-free imported goods or duty-free
indigenous goods within his overall permissible baggage
allowance.
14. Govt moves away from PPP model for roads: The
Highway Ministry appears to have dumped the public
private partnership (PPP) model, after no bids were
received under this model after 2012-13. With many
projects awarded in 2011-12 and 2010-11 on a PPP basis
also yet to take off, the Ministry has decided to go for EPC
(engineering procurement construction) contracts instead,
where only the design and construction parts are
contracted out. In the EPC model, the Government funds a
highway, with private firms designing and building the
road. This is unlike the PPP model, where the private sector
Page 9 of 19

has to fund the road-building. Earlier, the Government had
promoted two models of public-private partnership (PPP)
for building highways. The two PPP models were build-
operate-transfer (BOT)-toll and BOT-annuity.
15. Loans for affordable housing to get cheaper: Loans for
low-cost housing are set to get cheaper as housing finance
companies have been given easier access to overseas
funding. The National Housing Bank (NHB) will draft
guidelines to ensure a cap on interest rates for affordable
housing loans, which will be financed through overseas
funding.
16. Despite fall, rupee doing better than other global
currencies: The Indian rupees has declined 1.5 per cent
against the US dollar in 2013 compared to South Africas
rand which has declined 11.1 per cent, Russian ruble which
depreciated by 2.1 per cent. But Brazils Real has
appreciated 0.6 per cent and Chinas renminbi by 1.7%.
17. States role crucial in inflation control: According to
Reserve Bank of India Governor D. Subbarao, States have a
critical role to play in inflation management as they are
important stakeholders in eliminating supply constraints in
the economy. States could address the supply constraints
by increasing productivity in agriculture, improving
infrastructure especially rural infrastructure, streamlining
public distribution system and addressing governance
concerns to create enabling environment for investment.
18. Firms violating minimum public holding norm will face
backwash: According to SEBI Chairman U. K. Sinha,
companies which do not meet the minimum public
shareholding norm of 25 per cent by June this year will face
consequences. The deadline for Government companies,
which must have a minimum public shareholding of 10 per
cent, is August 2013. Despite these norms being laid down
three years ago, there are over a 100 companies that have
not moved towards compliance.
19. A bank should have only one broking licence: According
to a panel set up by IRDA, a corporate bank should be
allowed to have only one insurance broking licence. While
functioning of banks as insurance brokers would help
increase insurance reach, there could be conflict of interest
when a bank forms a broking firm as they are also
promoters of some insurance companies. The broking arm
of banks should be an independent, account unit to be
manned by exclusive staff trained by institutes imparting
insurance related education. On sub-broking, the
committee said it should be allowed for all insurance
products and not merely retail personal products. Small
banks such as cooperative banks and regional rural banks
should be allowed as sub-brokers. There should be a cap of
Rs 1 lakh premium on policies to be procured by the sub-
brokers. The panel is in favour of bancassurance channel, as
compared to the agency channel. Banks accounted for 11.25
per cent of total new business premium collected by life
insurers during 2011-12. The share was 36 per cent for
private life insurers and 1.51 per cent for Life Insurance
Corporation.
20. Peoples confidence in Indian banks intact: According to
a survey by strategic consultant, Gallup, despite allegations
of involvement in money laundering, 70 per cent
respondents in India have confidence in Indian banks.
21. Withholding tax on rupee-denominated infra bonds
lowered to 5%: From June 1, foreign investors will have to
pay 5 per cent withholding tax on interest earned on rupee-
denominated long-term infrastructure bonds issued by
Indian companies and Government securities. Earlier, the
rate was 20 per cent. The new norms will be applicable for
interest earned by foreign institutional investors and
qualified foreign investors between June 1, 2013 and May
31, 2015. Withholding tax is like tax deducted at source for
non-resident investors. In the 2011-12 Budget, the rate of
withholding tax on interest payments on borrowings of
infrastructure debt funds was reduced from 20 per cent to
5 per cent to enhance resource availability for
infrastructure development.
22. China signs pacts with India to bridge trade deficit:
China may soon resume imports of oilmeal and buy more
pharmaceuticals, marine products and buffalo meat in a bid
to narrow the widening trade gap between the two
countries. Indias trade deficit with China widened to $40.8
billion in 2012-13 from $39.4 billion in 2011-12, despite a
10 per cent contraction in total trade during the year.
23. RBI cuts time to bring back export earnings: In a bid to
attract dollars into the country in the face of rising current
account deficit (CAD), RBI has brought down the realisation
period of sale proceeds for exporters from 12 months to
nine months from the date of export.
24. FinMin feels let down by S&P rating: International rating
agency Standard & Poors (S&P) has reaffirmed a negative
outlook and rating of BBB (minus) for India whereas the
Finance Ministry expected a rating of stable outlook. This is
due to the fact that Indias GDP is likely to grow by more
than 6% higher than many other economies in the Asia
Pacific, except China. The Wholesale Price Index-based
inflation (WPI) for April was at 4.89 per cent, the lowest in
40 months. At the same time, retail inflation in April was
9.39 per cent. A fiscal consolidation road map has been laid
down, which intends to gradually reduce the fiscal deficit to
three per cent in 2016-17. The fiscal deficit for 2012-13 is
likely to be around five per cent and 4.8 per cent for 2013-
14. The countrys current debt is largely dominated in local
currency. Indicators such as short-term external debt,
external debt-to-GDP ratio, debt service ratio, maturity and
yield profile of Government debt are well within the
comfort zone, and better than many peer group countries.
During 2006-12, Indias debt/GDP ratio decreased by 12
per cent.

25. No need for unified regulator for housing finance
companies: According to R.V. Verma, Chairman and
Managing Director of National Housing Bank (NHB), the
business model of specialised HFCs was different from that
of banks and it calls for specialised regulation focusing on
innovation, personalisation and efficiency in both services
and pricing. Earlier, the SBI Chairman Pratip Chaudhuri
had pitched for a single regulator for all housing loans to
bring down the regulatory arbitrage between banks and
HFCs. Currently, RBI regulates the housing loans provided
by banks while NHB is the regulatory body for home loans
disbursed by HFCs. There are nearly 57 HFCs together
accounting for a little over 30 per cent of the Rs 7 lakh crore
housing loan market.
26. Design banking products for rural people: According to
Prakash Bakhshi, Nabard Chairman, with tiny landholdings
in rural India growing, there is a need to develop banking
products for farmers that will help in capital formation.
NABARD Chairman, inaugurated the new campus of
Bankers Institute of Rural Development (BIRD).
27. Bankers call for more awareness campaigns on ponzi
schemes: According to bankers, Financial literacy and
investor awareness campaigns need to be initiated to
caution depositors from investing in schemes floated by
shady companies. Financial market regulators such as the
CAIIB NEW/JAIIB

Page 10 of 19

Reserve Bank of India (RBI) and Securities and Exchange
Board of India (SEBI) should launch awareness campaigns.

28. India could face 200 mt coal shortfall by end of 12th
Plan: According to Planning Commission, India will still
face a shortfall of about 200 million tonnes of the fuel
source by the end of the 12
th
Plan Period and India would
have to depend on imported coal, unless it is able to tap
other natural resources to a greater extent for power
production. Indias coal demand is estimated to go up from
640 million tonnes (mt) in 2011-12 to about 980 mt by the
end of the 12
th
Plan (2012-17), by which time its
production could reach 795 mt.
29. No gas supplies for multiple connections: Households
that have more than one unverified cooking gas connection
under one roof will not get refills from June 1.
30. High fiscal deficit forces S&P to affirm negative outlook
on India: The agency has reaffirmed Indias sovereign
rating at BBB (minus). The outlook on the long-term rating
remains negative. A negative outlook implies a one in three
chance of a rating downgrade in the next 12 months.
31. House panel wants ban on unrealistic deposit
schemes: In the light of the Saradha group scam,
Parliaments Standing Committee on Finance has called for
a complete ban on all deposit schemes which promise
abnormal returns.
32. Cooperative societies more bankable for poor:
According to a RBI study, Cooperative societies are seen by
the poor as more approachable than banks.
33. NHB gets first-ever $100 m credit line from World
Bank: The World Bank Group has approved a $100 million
concessional loan to the National Housing Bank (NHB) for a
low-income housing programme. The soft loan is being
provided under the international development assistance
(IDA) window for a long-term tenure of 25 years. Through
this borrowing guaranteed by the Central Government
NHB will refinance mortgage loans for people in the
lower income segment at affordable rates.
34. Standardisation of life insurance products likely by
August: Under the IRDAs use and file process, life
insurers filing products based on standard parameters will
automatically be deemed to have been approved after 15
days of intimating the regulator.
35. In FY13, NRI deposits climb 19%: Non-resident Indians
(NRIs) placed deposits aggregating $14.18 billion in the
financial year ended March 2013, an increase of 19 per cent
over the previous year. NRE deposits with the banking
system jumped 85 per cent (rising by $15.81 billion in FY13
compared to $8.53 billion in FY12). The attractiveness of
NRE deposits lies in the fact that banks quote the same
interest rate on these as on domestic deposits.
36. Panel set up to evolve composite development index of
States: The Centre has set up an expert committee for
evolving a composite development index for States. This
expert committee will be headed by Raghuram Rajan, Chief
Economic Advisor to the Finance Ministry. This panel will
consider backwardness of the States in terms of measures
like distance of the State from the national average under
criteria such as per capita income and other human
development indicators. The present criteria for
determining backwardness are based on density of
population, terrain and length of international borders.
37. Need to bring down gold demand: According to Dr C.
Rangarajan, Chairman to the Prime Ministers Economic
Advisory Council, India needs to reduce its gold demand
from about 1,000 tonnes a year to 700 tonnes. This is
necessary as increased gold imports are adversely
impacting the current account deficit (CAD). The demand
for gold can be reduced by taming inflation and enhancing
the real rate of return on financial products.
38. Gas consumers in 20 districts to get subsidy
transferred to bank accounts: Nearly 76 lakh consumers
across 20 districts in eight States and two Union territories
would get their subsidy for domestic cooking gas directly in
their bank accounts starting June 1. The process is linked to
Aadhaar number. Consumers need to provide their Aadhaar
numbers to their LPG distributor as well as the bank where
they hold their account.
39. FinMin notifies scheme to encourage service tax
payment: In an effort to boost revenue, the Finance
Ministry has notified Service Tax Voluntary Compliance
Encouragement Scheme. This will be a one time scheme. It
aims to cover nearly 10 lakh service tax assessees who have
stopped filing tax returns. This scheme will be for non-filers
too. The assessees concerned will have to give a truthful
declaration of all pending dues between October 1, 2007
and December 31, 2012. Under the scheme, the assessee
will be given an opportunity to pay half of the dues by
December 31 this year while remaining amount can be paid
by June 30, 2014. There will be no interest, penalty or any
proceeding. However, if dues remain as on July 1, 2014, the
assessee will have to pay with interest by December 31.
This scheme will not cover any assessee against whom any
inquiry or investigation is pending by the issue of search
warrant or summon or by way of audit.
40. Wholesale inflation falls to 41-month low in April: The
wholesale price index (WPI)-based inflation for April
dropped to a 41-month low of 4.89 per cent. The April 2013
WPI inflation had the slowest pace since November 2009
when it had touched 4.78 per cent. Retail inflation for April
had come in at 9.39 per cent, lower than the 10.39 per cent
level in the previous month.
41. Banks prodding student borrowers to furnish PAN: To
prevent student borrowers from doing a vanishing act after
Page 11 of 19

completing higher education, banks are encouraging them
to apply for permanent account number (PAN) at the time
of taking loans. By asking for PAN, banks will be able to
track down those who have defaulted on loan repayments.
42. Exports rise in April, but trade deficit widens: Indias
goods exports grew for the fourth straight month in April at
1.68 per cent to $24.16 billion, but gold imports more than
doubled during the month widening the trade deficit.
43. Retail inflation falls in April to 9.39%: Retail inflation fell
for the second month in a row to 9.39 per cent in April on
the back of easing vegetable and edible oil prices. The
consumer price index (CPI)-based inflation for March stood
at 10.39 per cent in March and 10.91 per cent in February.
44. 23 major Central PSUs to invest around Rs 1.42 lakh cr:
The Prime Minister Office (PMO) has set a target of
approximately Rs 1.42 lakh crore for capital expenditure
and investment plans of 23 Central public sector
enterprises (CPSEs), and will monitor these on a quarterly
basis. These companies include ONGC, Oil India, GAIL,
Indian Oil, SAIL, NMDC, PowerGrid, NHPC, NTPC, and Coal
India besides others.
45. Exports rise in April, but gold imports widen trade
deficit: Indias goods exports grew for the fourth straight
month in April at 1.68 per cent to $24.16 billion, but gold
imports more than doubled during the month widening the
trade deficit. Gold imports during the month rose 138 per
cent to $7.5 billion from $3.1 billion in April 2012. With an
improvement in the US economy and rise in exports to new
markets such as Latin America, Africa and CIS, the
Commerce Department has set an export target of $325
billion for 2013-14 which will be about eight per cent
higher than $300.6 billion in 2012-13. Imports during April
increased 10.96 per cent to $41.95 billion, while trade
deficit increased 21 per cent to $17.78 billion.
46. India, Iran to push for trade to cross $25 b in 4 years:
Currently, Indo-Iran trade cooperation amounts to $15
billion.
47. Retail FDI: Local sourcing applies only to initial
investments: According to Commerce & Industry Minister
Anand Sharma, foreign investors in multi-brand retail will
have to compulsorily put in half of their total initial
investments into creation of new back-end infrastructure
facilities, but for additional investments in the future they
would be exempt from such a condition. The FDI policy
stipulates a minimum initial investment of $100 million in
multi-brand retail half of which is to be channelised into
back-end infrastructure such as processing, distribution,
design improvement, quality control, packaging, logistics,
storage, warehouse and agriculture market produce
infrastructure.
48. GST regime to exempt at least 96 items from tax: The
Centre and States have agreed to have a common exempted
list for at least 96 goods under the proposed Goods and
Services Tax (GST) regime. At present, 96 items are in the
exempted category of goods for Value Added Tax (VAT),
while the Centre has exempted 243 items from Central
excise.
49. SBI signs pact with Korea bank to support SMEs: State
Bank of India has signed a memorandum of understanding
with Industrial Bank of Korea to support the business
activities of Korean small and medium enterprises entering
or already operating in India. Currently, there are 480
Korean SMEs operating in India.
50. Govt may scale down export target of $500 b for this
fiscal: The doubling of exports by 2013-14 projected two
years ago was based on the economic conditions prevalent
at that time. Exports in 2012-13 fell 1.76 per cent to $300.6
billion compared to $306 billion the previous year, as
orders from the European Union and China dried up.
51. Brazils Azevedo is next WTO chief: Current WTO
Director-General Pascal Lamy, who is from France will
leave office on August 31.
52. Indian exports to Iran may touch $5 b in 2013-14:
Indias exports to Iran in 2012-13 jumped 39.4 per cent to
$3.36 billion from $2.41 billion in 2011-12 after the two
countries put in place a Rupee payment mechanism
payment for part of the oil purchased from Iran is
deposited in a Rupee account in Indias UCO Bank. This
money is then used to make payments to Indian exporters
to Iran thereby avoiding payments in dollars and through
foreign banks.

53. SBI not looking at group consolidation for now:
According to SBI Chairman, SBI was not looking at
consolidation of any of its associate banks with itself for
now. However, there was good economic logic in going for
consolidation of its associate banks with SBI.
54. Business correspondents help extend banking service
to over 2 lakh villages: The financial inclusion plan (FIP)
2010-13, which was introduced by various banks in April
2010, has so far provided banking services to 2.11 lakh
villages. Before this, the number of villages having banking
facility was 67,694. The number of business
correspondents, which was 34,532 before the
implementation of FIP, went up to 1.52 lakh as at end-
December 2012. And, various banks opened 5,694 rural
branches. The number of basic savings bank deposit
accounts has gone up from 73.45 million in 2010 to 171.43
million as at end-December 2012.
55. Factory Asia is Indias next target: According to Chief
Economic Advisor Raghuram Rajan, India aims to enter the
coveted Factory Asia league. Factory Asia refers to the
model of regional production networks connecting
different Asian economies, producing parts and
components that are then assembled, with the final product
shipped largely to advanced economies. This phenomenon
began with economic liberalisation in China in the late
1980s, aided by rapid development of production networks.
The group comprises, among others, China, Japan, South
Korea and Indonesia. India has moved up in country
ranking by manufacturing nominal gross value-added.
From 14
th
place in 1980, it moved up to 10
th
in 2011.
56. Transparency in pricing of retail loans: RBI has said that
practice of variation in rates of interest on borrowers with
same risk profile may be reflective of opaqueness in the
system. Banks should have a management oversight on
such practices and also frame policies that ensure pricing of
loans, especially retail loans, is transparent, realistic, and
related to the risk perception of the borrowers.
57. Cabinet panel okays PSU exchange traded fund launch:
The Cabinet Committee on Economic Affairs has approved
the setting up of a Central Public Sector Enterprises (CPSE)
Exchange Traded Fund (ETF). The move will help the
Government in its disinvestment programme. This ETF
would comprise CPSE stocks (from among the listed CPSE
stocks). Each stock would have a fixed weightage in the
basket.
58. Govt plans to set up Rs 5,000-cr inclusive innovation
fund: India plans to set up a dedicated Rs 5,000-crore fund
to boost scientific innovations that can improve the life of
the common man. The Union Government will initially
contribute Rs 100 crore to this fund to be called India
Page 12 of 19

Inclusive Innovation Fund. The remaining amount to the
fund will come from scheduled banks, insurance
companies, corporates and high networth individuals as
well as bilateral and multilateral institutions.
59. Strong regional demand to drive growth in Asia: The
newly appointed President of the Asian Development Bank
(ADB), Takehiko Nakao, has expressed hope that Asian
countries will continue to enjoy growth based on strong
demand in the region.
60. World Bank sees India growing at 6.1% this fiscal:
Growth is expected to increase further to 6.7 per cent in
2014-15. The World Banks optimism stems from positive
data points in the recent months in the areas of
manufacturing, inflation and better export numbers.
61. Inflation-indexed bonds: RBI will issue inflation-index
bonds (IIBs). However, there will be no special tax sops for
investments in these bonds. IIBs are aimed at weaning
investors from investing in gold and real estate and
channelling public savings into financial instruments. These
bonds will have a fixed real interest rate and a nominal
principal value that is adjusted against inflation. Each retail
investor can invest from Rs 10,000 to Rs 2 crore in the
primary issuances of IIBs that will have tenure of 10 years.

JUNE 2013
1. S.K. Roy has been appointed as the new Chairman of Life
Insurance Corporation.
2. Indian Railways has decided to start offering train tickets via
mobile SMS. The services of IRCTC, the subsidiary of Indian
Railways will come into effect from July 2013. The fees will
be around 0.15 to 0.25 US dollars.
3. China has developed the Fastest Computer of the World
Called Tianhe-2. Tianhe-2 is a supercomputer developed by
China's National University of Defense Technology.
4. Retirement fund body Employees' Provident Fund
Organization (EPFO) has launched its e-Passbook service. It
will help PF subscribers to access their accounts online.
Active subscribers, whose electronic challan-cum-return is
already uploaded, can download their e-Passbook every
month.
5. A survey conducted by United Nations Conference on Trade
and Development (UNCTAD) revealed that India was the
third most attractive destination for investment in the world
after China and the United States.
6. Muthoot Finance got in-principal approval from the Reserve
Bank of India (RBI) for establishing as well as operating
White Label ATMs (WLAs).
7. An On-site Passenger Complaint Redressal System (OPCRS)
is being developed by Railways to launch an SMSbased
service for immediate response to passenger complaints
regarding housekeeping service in coaches.
8. The Government has announced that growth in Indias gross
domestic product (GDP) in 2012-13 crashed to 5%, the
lowest in 10-years.
9. Due to higher revenue receipts and higher non tax revenue
collection, fiscal deficit for 2012-13 has come to 4.89 per
cent of GDP against revised estimate of 5.2 per cent. The
government in the Budget had proposed to lower fiscal
deficit to 4.8 per cent of GDP in 2013-14 and reduce it
gradually to 3 per cent by 2016-17.
10. As per RBI, overseas direct investment by Indian companies
more than trebled to USD 7.64 bn in April 2013, from USD
1.89 bn in March 2013.
11. As per a new index of financial inclusion released by ratings
and analytics firm CRISIL, southern states have emerged on
top on financial inclusion parameters, while the East and
some of the developed states of the West - including Gujrat
and Maharastra are below the national average. As per the
index, Puducherry topped the list, followed by Chandigarh
and Kerala.
12. The first-ever Dalit industries-focused social impact fund, -
DICCI SME Fund has been launched. The venture capital
fund, initiated by the Dalit Indian Chamber of Commerce &
Industry (DICCI), aims to raise Rs 500 crore which would be
deployed over the next 10 years to finance Dalit
entrepreneurs. The fund, approved by Sebi, was launched
with an initial contribution of Rs 10 crore by the Small
Industries Development Bank of India.
13. The Govt has raised import duty on gold by two percent
from 6% to 8% to discourage imports.
14. As per 68th round of National Sample Survey Organisation
(NSSO), the percentage of Indians employed in agriculture
hasslipped below 50%; Male unemployment in urban areas
has risen to 3.2%.
15. India has slipped to 70th position in terms of foreign money
lying with the Swiss banks and accounts for a meager 0.10%
of total global wealth held in the Switzerland banking
system.
16. As per United Nations population report, India would pip
China as the worlds most populated country in the world by
2028.
17. The Global Innovation Index (GII) 2013, has ranked India as
66th most innovative nation among 142 economies.
Switzerland topped the list, followed by Sweden, United
Kingdom, Netherlands and the US.
18. India is projected to replace China as the world's largest
cotton producer by 2022 on account of higher growth in
output over the next decade.
19. As per Organisation for Economic Cooperation and
Development (OECD), India has probably surpassed Japan
to become the world's third largest economy after the US
and China, even as it lowered country's economic growth
projection for 2013 to 5.3%.
20. By early 2030s, the BRIICS' (Brazil, Russia, India, Indonesia,
China and South Africa) combined GDP should roughly equal
that of the OECD (based on current membership).
21. As per Ministry of Statistics and Programme
Implementation, monthly per capita expenditure (MPCE),
measured in terms of uniform reference period, for urban
areas rose by 17% from Rs 2,399.24 in 2011-12 to Rs.
1,785.81 in 2009-10. However, rural MPCE rose faster by
19% to Rs. 1,278.94 from Rs 9,27.70 during the same period.
22. Due to robust increase in business in the last two years, the
Finance Ministry has allowed 15 of the 19 nationalised
banks to create up to three additional positions in the rank
of general manager. The ministry has also relaxed the
guidelines for promotion of officers, who do not have
sufficient work experience in rural/semi-urban areas, and
specialist officers, who do not have sufficient experience in
field operations.
23. The Railway Board hopes to complete installation of bio-
toilets in all 40,000-plus coaches of the Indian Railways by
2019.

Page 13 of 19


24. The headline inflation for May dropped to a 42-month low of
4.7 per cent.
25. A total of 29 Axis Bank accounts, including 12 salary
accounts of Mumbai police personnel, were hacked in April
and May. A sum of Rs 13 lakh was withdrawn through ATMs
in Greece from 29 accounts.
26. Huge costs, particularly relating to employee benefits and
provisioning for non-performing assets, might delay the
merger of the five associate banks with State Bank of India.
27. The consumer price index (CPI)-based inflation for May was,
however, lower than retail inflation of 9.39 per cent in April.
28. Fitch revises Indias rating outlook to stable from negative
mainly because of a lower-than-estimated fiscal deficit and
reform initiatives by the Government.
29. April industrial growth revised upward to 2.3%. Electricity
generation growth has been revised to 4.2%.

VARIOUS RATES AT GLANCE
Bank Rate 10.25%
CRR 4.0%
SLR 23.0%
Repo Rate 7.25%
Reverse Repo Rate 6.25%
MSF Rate 10.25%

JULY 2013
1. SEBI GETS MORE TEETH The Securities Law
Amendment Ordinance 2013 was promulgated on July
18, 2013 to amend the -- the Securities and Exchange Board
of India (Sebi) Act, the Securities Contracts Regulation Act
(SCRA) and the Depositories Act, for providing more
powers to the capital markets regulator for enforcement
against illegal Collective Investment Schemes and to curb
insider trading.
2. Owing to new and innovative methods of raising funds from
investors, such as art funds, time-share funds, emu /goat
farming schemes, there has been regulatory gap /overlap
regarding types of instruments / fund raising. At the same
time, SEBI receives complaints against unapproved fund
raising activities of certain companies that claim that they
do not come under the purview of SEBI Collective
Investment Scheme regulations. With the amendments in
force now, SEBI would have powers to regulate any pooling
of funds under an investment contract involving a corpus of
Rs.100 Crore or more, attach assets in case of non-
compliance and Chairman SEBI would have powers to
authorize the carrying out of search and seizure operations,
as part of efforts to crack down on ponzi schemes. Main
provisions of the amending Ordinance are given below:
1. Collective Investment Schemes: To tackle the growing
menace of ponzi schemes being floated as Collective
Investment Schemes (CIS), any money collection of Rs
100 crore or more will be classified as CIS operation.
Sebi has been given powers to crack down on illegal
investment schemes floated by individuals as well. Till
now it had power to probe against companies.
However, all government-notified schemes would be
out of the Collective Investment Scheme framework.
2. Disgorgement: Sebi has been given powers to pass
disgorgement orders for amount equivalent to
wrongful gains or to losses averted by contravention of
regulations. Thus, powers have been granted to Sebi in
order to recover wrongful gains made in contravention
of law. The amount disgorged shall be credited to
Investor Protection and Education Fund established by
the Board.
3. Recovery: If a person fails to pay the penalty imposed
by Sebi or fails to comply with any direction for refund
of money or any disgorgement orders, the recovery
officer appointed by Sebi can proceed to recover such
an amount. The recovery can be done through modes
including attachment and sale of the persons movable
or immovable properties, attachment of bank accounts,
arrest of the person and his detention in prison, or
appointment of a receiver for the management of the
persons properties. The properties and bank accounts
that can be attached would also include those
transferred to the names of his spouse or minor child,
or sons wife or sons minor child. These provisions
would continue to apply even after attainment of
majority by a minor child or sons minor child during
the attachment procedures.
4. Power to seek information: SEBI can seek information
from other domestic and foreign regulators
retrospectively from March 6, 1998. For seeking
information from outside the country, Sebi can enter
into an arrangement, agreement or understanding
with relevant foreign authorities with the prior
approval of the central government. Further, Sebi can
now ask for information or records from any person,
banks, authorities, boards or corporation, if the
regulator is of the opinion that such details could be
relevant to any investigation or inquiry being
undertaken by it. Besides, SEBI would have powers to
seek information, such as telephone call data records,
from any persons or entities in respect to any
securities transaction being investigated by it.
5. Search: The regulator can now enter and search
buildings, places, vessels, vehicles and aircraft of
defaulters. Its officers can also break open the lock of
any door, box, locker, safe almirah, etc to get
information from suspected entities. Sebi can also
Page 14 of 19

access the documents maintained in the electronic
format.
6. Special Court: For speedy trial of offences under
various Sebi regulations, Central Government can set
up as many special courts as may be necessary. Such
courts would consist of a single judge to be appointed
by the central government with concurrence of the
Chief Justice of the High Court within whose
jurisdiction the judge to be appointed is working. The
judge would need to hold the office of a Sessions Judge
or an Additional Sessions Judge immediately before
such appointment. Till the time a Special Court is
established, any offences committed under Sebi Acts
would be tried by a Session Court.
7. Settlement: Any person against whom any proceedings
have been or may be initiated by Sebi under certain
sections, may file an application to Sebi proposing for
settlement of such proceedings for the alleged defaults.
After taking into account the nature, gravity and
impact of defaults, Sebi can accept or reject such a
settlement on payment of an amount to be decided by
the regulator, subject to various terms and conditions.
However, no appeals can be made against Sebis
decision in these matters. The settlement provision has
been made applicable retrospectively with effect from
April 20, 2007.
3. Government believes that these amendments would give
SEBI the legal backing to clamp down on unscrupulous
entities that are using newer methods to take gullible
investors for a ride.
4. Fraud on banks, more by the rich: According to Dr K. C.
Chakrabarty, Dy Governor, RBI, an analysis of the frauds
reported in the banking system over the last two decade
shows that the number of frauds had not gone up
significantly, but the quantum has increased manifold. The
number of reported frauds in the banking system over the
last 10 years was 1,76,547, and valued at Rs 31,400 crore.
In the last 25 years, a mere 61 fraud cases (involving Rs 50
crore or more in each case) accounted for a whopping Rs
13,000 crore, through 208 bank accounts. Instead of
transaction-related frauds (like credit/debit card, and so
on), loans-related frauds are major area of concern.
5. Govt to extend barcoding, labelling norms to all major
exports: As of now, barcoding and labelling is mandatory
for export of grapes and pharma products. It would
improve quality and prevent spurious goods.
6. IRDA bancassurance norms may be delayed: The
Insurance Regulatory and Development Authority (IRDA)
guidelines for tie-ups of insurance companies with banks
for distribution of products may be delayed as the feedback
to the regulator reflects divergent views from various
stakeholders. Under the current bancassurance
(distribution of insurance products through banks) model,
a bank is allowed to become corporate agent of only one
insurer it can sell insurance products of one life, one
general insurer and a standalone health insurer. But after
becoming a broker, banks can sell products of multiple
insurance companies. In the Budget, the Finance Minister
had allowed banks to become insurance brokers, selling the
policies of several insurance companies. According to
current IRDA guidelines, a broker has to set up a separate
subsidiary with a separate share capital for distribution of
insurance products. However, the insurance regulator is
considering amending this regulation to allow banks to
distribute insurance through their existing branches
without setting up a separate subsidiary. IRDA favours
banks acting as brokers as banks which have a fiduciary
responsibility under broking guidelines will represent the
customer rather than the insurance company under the
present corporate agent set-up. So, it is expected to bring
down any chances of mis-selling. However, RBI believes
that banks assuming the role of insurance brokers may lead
to a conflict of interest. Where the bank promotes an
insurance company, it may also expose the bank to
reputational risks. The life insurance industry has made a
representation to the insurance regulator, stating that a
bank should be allowed to sell policies of five companies,
with not more than 25 per cent share per insurer.
7. Infra debt funds thrown open to pension monies: To
provide a boost to infrastructure, the PFRDA has allowed
domestic pension funds to invest in infra debt funds set up
as mutual funds. The decision gives IDFs much-needed
access to long-term funds. The PFRDA move will also open
a new investment avenue for pension fund managers and
may help National Pension System (NPS) subscribers earn
higher returns. Funds can be parked in the funds provided
the IDFs are rated investment grade by at least two credit
rating agencies.
8. I-T Dept letters to 35,000 non-filers: The Income-Tax
Department has sent 35,000 letters to another batch of
non-tax filers on July 22, urging them to disclose their true
income and pay due taxes. These persons were part of the
around 12 lakh non-filers identified as a result of data
matching exercise. With this latest batch, the department
has now issued letters in 2,10,000 high priority cases.
9. Net Banking Transactions: NetCore Solutions has recently
launched 2FA (second factor authentication), a software
that will recognise your missed call and pave your way for
entry into the Net banking facility. When a customer logs
into Net banking with his password, a separate screen pops
up with a landline number. One has to give a missed call
from their mobile to the landline number within two
minutes. NetCore software receives the missed call and
matches it with the customers mobile number registered in
the banks database to provide access. NetCore clientele
includes Axis Bank, ICICI Bank, Kotak Bank, IDBI Bank,
Standard Chartered Bank, HDFC, IndusInd Bank and
Development Credit Bank. Banking regulator Reserve Bank
of India recently made it mandatory for all banks to
implement 2FA for all online transactions.
10. To curb Re volatility, RBI tightens fund flow: The central
bank on 23
rd
July said individual banks can tap its liquidity
adjustment facility (LAF) only up to 0.5 per cent of their
deposits. Given that aggregate deposits in the banking
system stood at Rs 70,90,000 crore in the fortnight ended
June 28, the system as a whole will be able to access from
the RBI only Rs 35,450 crore a day. On July 16, the RBI had
set a limit of Rs 75,000 crore on the amount banks could
collectively borrow from it at 7.25 per cent interest. Before
this, banks had unlimited access to funds from the RBI,
provided they had excess government securities to pledge.
Further, RBI has asked banks to maintain a minimum daily
cash reserve ratio balance of 99 per cent of the requirement
against 70 per cent earlier.
11. 30% sourcing from SMEs not possible: Walmart has told
Govt that it can at best source about 19.5 per cent from the
SMEs. According to the FDI policy for multi-brand retail
trading, at least 30 per cent of the value of procurement of
manufactured/processed products should be sourced from
Indian small industries.
12. Corruption hurts foreign investments: According to the
FICCI and E&Y report titled Bribery and corruption:
Ground reality in India, several reports place India among
the top three countries globally as an attractive investment
destination, but in terms of ease of doing business India
still has a long way to go. Corruption invariably increases
Page 15 of 19

transaction costs and uncertainty in an economy while
lowering efficiency by forcing entrepreneurs to divert their
scarce time and money to bribery rather than production.
13. India winning battle against poverty: According to the
new estimates of Planning Commission, the poverty ratio
has declined to 21.9 per cent in 2011-12 from 37.2 per cent
in 2004-05. The percentage of population below poverty
line in 2011-12 has been estimated at 25.7 per cent in rural
areas and 13.7 per cent in urban areas. The percentage of
population below the poverty line in 2004-05 was 41.8 per
cent in rural areas, 25.7 per cent in urban areas, and 37.2
per cent in the country as a whole. The new estimates,
based on 2011-12 Household Consumption Expenditure
estimates by the National Sample Survey Organisation, have
been arrived at using the methodology suggested by the
Suresh Tendulkar committee in 2009. The Tendulkar panel
had redrawn the poverty line at a daily consumption
expenditure of Rs 22.42 per person in rural areas and Rs
28.65 in urban areas. The new poverty line pegs daily per
capita consumption expenditure at less than Rs 27.20 in
villages and Rs 33.33 in cities. Now, for 2011-12, for rural
areas the national poverty line using the Tendulkar
methodology is estimated at Rs. 816 per capita per month
and Rs. 1,000 per capita per month in urban areas. Thus, for
a family of five, the all India poverty line in terms of
consumption expenditure would amount to about Rs 4,080
a month in rural areas and Rs 5,000 a month in urban areas.
In actual terms, there were 26.93 crore people below
poverty line in 2011-12 as compared with 40.71 crore in
2004-05. The methodology used here factors in money
spent on health and education besides calorie intake to fix
the poverty line. The below poverty line ratio in rural areas
was highest for Chhatisgarh (44.61%) and least for Goa
(6.81%).
14. RBI tightens gold import rules: To further dampen gold
imports, the Reserve Bank of India has directed nominated
banks/agencies to ensure that at least 20 per cent of every
lot of import is exported. Earlier, there was hike in the
import duty to 8 per cent from 6 per cent in June to
moderate gold demand. Unrelenting import of the yellow
metal has been one of the main reasons for the rupee
weakening against the dollar.
15. Weak rupee will stoke inflation, fiscal pressures:
According to Moodys, steep depreciation of the rupee
against the dollar will intensify inflationary and fiscal
pressures in India. This will pose additional constraints on
the monetary policy response to the current growth
slowdown.
16. A.R. Rather, J&K Finance Minister, to head GST panel:
The Empowered Committee of States Finance Ministers on
Goods and Services Tax elected Finance Minister of Jammu
and Kashmir Abdul Rahim Rather as its new Chairman.
17. Banks seek priority sector tag for loans to affordable
home builders: Currently, bank loans up to Rs 25 lakh to
individuals in metropolitan centres and Rs 15 lakh in other
centres for purchase/construction of a family dwelling unit
are classified as priority sector loans. Affordable housing
projects are those where individual units have a maximum
carpet area of 60 sq. m. Further, the cost of the unit should
not exceed Rs 30 lakh while the loan amount cannot exceed
Rs 25 lakh.

18. Filing I-T returns back for salaries up to Rs 5 lakh/year:
According to Union Finance Ministry, the exemption
provided during the last two years for assesses with annual
income up to Rs 5 lakh is not being extended for
assessment year 2013-14. Earlier, Govt had exempted
salaried employees with total income up to Rs 5 lakh,
including income from other sources up to Rs 10,000, from
the requirement of filing return of income for assessment
years 2011-12 and 2012-13, respectively. Further, e-filing
of return is compulsory for 2013-14 for persons having
total assessable income over Rs 5 lakh.
19. Model PPP schools from 2015-16: The Union
Government intends to roll out model schools under public-
private partnerships (PPP) from the 2015-16 academic
session. These schools will provide secondary education.
The HRD Ministry, along with the Planning Commission, has
finalised the model concession agreement (MCA) for the
setting up of 2,500 model schools under the PPP model.
Under this arrangement, private players will invest in land
and buildings and manage the school. State governments
would help in acquiring land. At least 40 per cent of the
students in the schools would not be charged any fee. The
Union Government will bear the cost of teaching these
students at the rate applicable in schools run and owned by
the Centre. According to estimates, the operational cost of
teaching one student in a central school was around Rs
21,000 a year in 2011-12. However, other students will
have to pay the fee prescribed by the PPP schools.
20. Natural gas output will rise by 66% in 4 years:
According to Petroleum and Natural Gas Minister M.
Veerappa Moily, gas output from all sources is expected to
be around 105 million metric standard cubic metres per
CAIIB NEW/JAIIB

Page 16 of 19

day (mmscmd) in 2013-14. By 2016-17, this is expected to
touch 175 mmscmd. The additional gas sources also include
ONGCs block in the KG basin (KG-DWN 98/2), where it has
projected to pump out 29 mmscmd of gas in 2016-17.
21. RBI gives in-principle nod for all-woman bank: The
proposed bank will be the first-ever commercial bank to be
floated by the Central Government. The Government will
initially pump in Rs 1,000 crore as paid-up capital of the
bank. It will lend mostly to women and women-run
businesses besides providing support to women self-help
groups. To begin with, the bank will have a branch each in
eight cities Kolkata, Guwahati, Chennai, Bengaluru,
Jaipur, Lucknow, Mysore and Indore. It will be
headquartered in Delhi and is expected to be operational by
November 2013. The bank, whose key objective is to focus
on the banking needs of women and promote economic
empowerment, received in-principle approval from RBI on
June 27, 2013. Usha Ananthasubramanian, Executive
Director, Punjab National Bank, is expected to take charge
as the first chief of the new bank.
22. WTO to discuss Indias proposal to hike food subsidy
limits: The Agreement on Agriculture allows so-called
market distorting subsidies up to a limit of 10 per cent of
total production. While such subsidies were negligible in
India during the Uruguay Round in the late eighties and
early nineties when these rules were being framed, it is
now hovering close to the limits set and could be breached
soon. The proposal, which is being pushed at the WTO by
the G-33 group of developing countries of which India is an
active member, calls for an amendment in the WTOs
Agreement on Agriculture to loosen disciplines on domestic
support, including public stockholding and food aid, in
order to enhance food security by supporting poor farmers
and consumers.
23. Govt eases FDI norms across board: To boost the sagging
economy, the Government hiked foreign direct investment
(FDI) limits on 16
th
July 2013 in a host of sectors. Earlier,
Government had allowed foreign investments in multi-
brand retail and civil aviation. There was no change in FDI
norms for information and broadcasting, civil aviation,
multi-brand retail and petroleum and natural gas. Foreign
investments allowed through the automatic route in
petroleum and natural gas, commodity bourses, and power
exchanges, while retaining the 49 per cent cap. The
widening current account deficit and the falling rupee have
prompted the Government to look at ways to attract more
foreign investments. A snapshot of the revised investment
limits is given below:
a. FDI cap in telecom raised to 100 pc from 74 pc; up to
49 pc through automatic route and beyond via FIPB
b. No change in 49 pc FDI limit in civil aviation
c. FDI cap in defence production to stay at 26 pc, higher
investment may be considered in state-of-the-art
technology production by Cabinet Committee on
Security.
d. 100 pc FDI allowed in single brand retail; 49 per cent
through automatic, 49-100 per cent through FIPB
e. FDI limit in insurance sector raised to 49 per cent from
present 26 per cent, subject to Parliament approval
f. FDI up to 49 pc in petroleum refining allowed under
automatic route, from earlier approval route
g. In power exchanges 49 per cent FDI allowed through
automatic route, from earlier FIPB route.
h. Raised FDI in asset reconstruction companies to 100
per cent from 74 per cent; of this up to 49 per cent will
be under automatic route
i. FDI limit increased in credit information companies to
74 per cent from 49 per cent
j. FDI up to 49 per cent in stock exchanges, depositories
allowed under automatic route
k. FDI up to 100 per cent through automatic route
allowed in courier services
l. FDI in tea plantation up to 49 per cent through
automatic route; 49-100 per cent through FIPB route
m. No decision taken on FDI cap in airports, media,
brownfield pharma and multi-brand retail.
24. Top public sector insurers, GIC to set up new third-
party administrator: The new company will have a share
capital of Rs 200 crore, which will be contributed by the
four companies. The four public sector general insurance
companies New India Assurance, United India Insurance,
National Insurance and Oriental Insurance will pick up
about 95 per cent of the equity between them, while GIC
will take 5 per cent.
25. Food prices drive WPI inflation to 3-month high: The
headline inflation for June 2013 at 4.86% was higher than
the 4.70 per cent recorded in May. Core inflation eased to a
42-month low of 2.15 per cent as compared to 2.35 per cent
in May. Food inflation rose to 9.74 per cent in June from
8.25 per cent in the previous month. CPI inflation for June
came in at 9.87 per cent, higher than 9.31 per cent in the
previous month.
26. Global factors to blame for weakening rupee: The
exchange rate of the rupee is susceptible to the influence of
large capital movements, especially during crisis periods, in
view of the large current account deficit. A deficit in the
Current Account arises when a countrys total imports of
goods, services and transfers are greater than exports.
During 2012-13, the CAD rose to $87.8 billion (4.8 per cent
of GDP) as against $78.2 billion (4.2 per cent of GDP) during
2011-12. According to Mr G. Padmanabhan, Executive
Director, RBI, the rupee came under some pressure
primarily on account of external developments.
27. Exports in June dip 4.5%; relief on trade deficit front:
Exports in June 2013 dipped 4.56 per cent to $23.78 billion
compared with $24.92 billion in June 2012, while imports
declined by a smaller 0.37 per cent to $36.03 billion
compared with $36.16 billion last year. A steep decline in
import of gold and silver to $2.45 billion in June 2013 from
$8.4 billion and $7.5 billion in May and April respectively
following increase in import duties on gold and other
stringent conditions placed on imports by the RBI played a
key role in containing trade deficit at $12.2 billion.
28. IIBF starts new courses: Indian Institute of Banking and
Finance and Institute of Company Secretaries of India have
jointly launched a course on Certified Banking Compliance
Professional Course.
29. IDBI offers inflation-indexed bonds to retail investors:
IDBI Bank has modified its online investment portal
Samriddhi to enable retail investors and high net-worth
(HNI) individuals to invest in inflation-indexed bonds
(IIBs). The Government introduced such bonds in June to
offer investors an alternative to investing in physical assets,
such as gold and real estate.
30. Retail inflation jumps to 9.87% in June: Food inflation in
June rose to 11.84 per cent from 10.65 per cent last month.
31. IIP contracts 1.6% as manufacturing drags: The
manufacturing sector, which accounts for 75 per cent of the
IIP, recorded a two per cent decline in May 13 against 2.6
per cent growth in same month last year. Capital goods
output declined 2.7 per cent in May against a decline of 8.6
per cent in the same month last year.
32. Banks seek lower tenure for non-resident deposits: To
attract more dollars into the domestic market, bankers
have requested the Reserve Bank of India to cut the
minimum period of investment in Foreign Currency Non
Page 17 of 19

Resident (FCNR) and Non Resident External (NRE) account
to six months from one year now.
33. Rai Bareli to get 2 Central universities: The Union
Cabinet has approved the setting up of two universities
the Rajiv Gandhi National Aviation University and the
Indira Gandhi National University for Women at Rai Bareli.
Both the universities will be funded by the Centre.
34. TAPI pipeline will be completed by 2017: According to
Minister for Petroleum and Natural Gas, M. Veerappa Moily,
the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas
pipeline project is to be completed by 2017.
35. Drawback rate on silver articles slashed: The Finance
Ministry has slashed down the drawback rates on silver
articles to Rs 1795.5 per kilogram of net silver content in
such jewellery. Prior to this change, drawback rate stood at
Rs 2,590.80 per kilogram of silver content in the jewellery.
This Revenue Department move comes in the backdrop of
sharp decline in silver prices in the recent months. Under
the duty drawback scheme, the Revenue Department
refunds the duty incidence (customs, excise and service tax)
on the imported inputs used in the manufacture of exported
goods.
36. PMs Monitoring Group clears 4 projects worth Rs
8,000 crore: This is in addition to the 11 power projects
cleared earlier involving an investment of Rs 52,300 crore.
The Project Monitoring Group (PMG), set up in the Cabinet
Secretariat, is a facilitating body for stalled projects serving
as a platform to bring together all ministries involved with
projects not taking off. Bank funds worth an approximate
Rs 7 lakh crore are locked in projects that are stuck due to
various reasons.
37. More scholarships for tribal students: The Union Cabinet
has approved the proposal to increase the total annual
family income ceiling for ST students under the Central
sector scholarship scheme of top class education from the
existing Rs 2 lakh to Rs 4.5 lakh. This comes into effect from
2013-14.
38. Flipkart nets Rs 1,200 crore in single-largest funding:
Flipkart has raised $200 million from its existing investors
including South African technology company Naspers
Group and private equity firms Accel Partners and Tiger
Global. This marks the single-largest round of funding for
an Indian e-commerce company.
39. External borrowing: RBI opens automatic route for
asset finance firms: RBI has allowed asset finance
companies (AFCs) to tap the external commercial
borrowing (ECB) window under automatic route. Earlier,
AFCs that operated as non banking finance companies
(NBFCs) were allowed to avail themselves of ECBs, but only
under the approval route.
40. SIDBI to fund banks for lending to small units: The Small
Industries Development Bank of India (SIDBI) is planning
to give liquidity support to financial intermediaries to
encourage them to give loans to micro enterprises.
Towards this end, SIDBI has tied up with German
development bank KfW for a line of credit aggregating 100
million (about Rs 780 crore).
41. Loan recovery: Mid-size banks too start naming and
shaming guarantors: Mid-size public sector banks are
naming and shaming the guarantors. Lenders such as
Allahabad Bank have started publishing photographs of
guarantors in the public notices (newspaper
advertisements) they put out for sale of properties
mortgaged with them for the loan. State Bank of India, the
countrys largest commercial bank, has for some time now
been publishing photographs of loan defaulters to shame
them into paying up. UCO Bank has also adopted this
approach.

42. FinMin wants LIC to play more active role in entities
where it has a major stake: LIC, with around Rs 18-lakh
crore worth assets under management, had more than 15
per cent holding in entities such as Corporation Bank,
Simplex Realty, Standard Battery and Larsen and Toubro as
of March 2013. IRDA guidelines cap the equity limit of LIC
in a company at 15%. However, the LIC Act allows the
insurer to invest up to 30 per cent in a single company.
43. 2 RRBs merge to form Kerala Gramin Bank: The newly
formed bank comes into existence with effect from July 8.
The command area of the new bank will be all the 14
districts of Kerala. The headquarters of the new bank will
be at Malappuram and is sponsored by Canara Bank.
44. Zone-wise tie up by insurers, banks will be messy: To
improve insurance penetration through the banking
systems wide branch network, the IRDA (Insurance
Regulatory and Development Authority), in its earlier
guidelines, had proposed to divide the country into three
zones and place a cap on the number of States in which an
insurance company can tie up with a bank.
45. However, as per Financial Services Secretary Rajiv Takru,
the proposal to have a zone-wise tie-up with banks will
result in logistical problems if the zone-wise tie-up is
implemented.
46. CIBIL alert on high-risk/very good customers: CIBIL,
the countrys largest credit bureau, will soon launch a new
service that will alert banks about defaults and on any
profile change of an identified set of customers. Likely to be
called ALERT, this subscription-based service will help
member-banks to retain customers with good repayment
record. If a customer with an existing relationship with, say,
bank A for a credit card were to look for a home loan from
another credit institution, say, bank B, then CIBIL will notify
bank A that its existing customer is looking for a new
product.
47. Online crop insurance service from United India: The
web portal would facilitate insurance agents offer farmers
services such as transfer of data on real-time basis and
faster settlement of claims. The farmers will be given an
identification number that can be used for further renewals.
48. Debt traps India Inc as profits fail to cover interest
outgo: An increasing number of Indian companies are
finding themselves in a debt trap, with their gross profits
not sufficient to cover their interest payments. Of the 600
listed companies (excluding banks and finance companies)
that had interest obligations in 2012-13, 85 were unable to
meet their interest expenses out of their gross profits
(profits before interest, depreciation and tax).
49. 2/3rd of farm suicides take place in 4 cotton-growing
States: Last year, 68 per cent of all the 13,754 farm suicides
took place in Maharashtra, Andhra Pradesh, Karnataka and
Madhya Pradesh. About 70 per cent of cotton farming in
these four States is done on dry-land. Agricultural scientists
say that dry land is not suitable for water-intensive crops
such as cotton.
50. Transport corridor to boost trade with Azerbaijan: The
corridor is the ship, rail and road route to move freight
from South Asia to Europe through Central Asia, the
Caucasus and Russia. The route involves moving goods
from India via ship to Iran. From Iran, the freight moves by
ship across the Caspian Sea or by truck or rail to Southern
Russia. From there, the goods are transported by truck or
Page 18 of 19

rail along the Volga River through Moscow to Northern
Europe.
51. Indias poverty rates will drop by half by 2015: As per a
UN report, India was able to reduce its poverty rate from 49
per cent in 1994 to 42 per cent in 2005 and 33 per cent in
2010. If the current pace continues, India will meet the
poverty reduction target by 2015. Extreme poverty has
been defined as living below $1.25 per day per person. The
global goal of reducing extreme poverty by half was
achieved by 2010, five years before the deadline.
52. M.S. Raghavan takes charge as IDBI Bank CMD: Prior to
this, he was the Executive Director of Bank of India.
53. NSE unveils new index LIX-15: The National Stock
Exchange has launched a new index, LIX-15. The index will
consist of 15 stocks drawn from the CNX-100 index. These
have a minimum free float market capitalisation of Rs 5,000
crore with a turnover ratio (TRO) greater than 100 per cent
in majority of the last six months and are individually
eligible for the F&O segment. Turnover ratio is the ratio of
scrips monthly turnover to average free float for the month
annualised. The maximum weight of a single stock has been
capped at 15 per cent. LIX-15 will have a base value of
1,500 and a base date of January 1, 2009.
54. Banks told to link core banking solutions, share
correspondents: To ensure that beneficiaries of direct
benefit transfer (DBT) are able to access real-time banking
services, the Finance Ministry wants seamless connectivity
between banks core banking solution platforms and
business correspondents. Currently, many business
correspondents (BCs) operate offline. As a result,
sometimes DBT beneficiaries are not upto-date about the
funds position in their bank accounts.
55. New online form to make PF transfer claims easier: The
revised form, can be presented after verification, either
through the present employer or previous employer.
Earlier, the form could be submitted after verification only
through the present employer. This form can be submitted
online as well as in physical form. The facility of online
submission of this form will be given shortly after process
of collecting the digital signature of the employer is
completed.
56. Food Bill: Govt takes ordinance route: The Government
has issued the ordinance to implement Food Security Bill.
The Bill aims to give legal rights to 67 per cent of the
population over a uniform quantity of 5 kg foodgrains a
month at Rs 1-3 a kg. The Bill seeks to provide cheaper
foodgrains to around 80 crore people at an initial annual
cost of around Rs 1.25-lakh crore. Currently, the
Government incurs a subsidy burden of about Rs 1-lakh
crore in providing subsidised foodgrains to the poor
through the public distribution system. The
implementation of the Bill would also increase foodgrain
requirement by around seven million tonnes to about 61.23
million tonnes.

57. From Oct, service tax to make LIC policies pricier: While
private insurers add a service tax component of about 3%
to the premium paid by customers, LIC has not been levying
the tax on its popular endowment and money-back plans.
From October, however, all LIC policies will attract a
separate service tax. IRDA, has mandated that service tax
shall not be included in the contractual premium, but
collected from policyholder separately.
58. Lack of proper authentication overseas led to card-
skimming frauds: RBI has said that money gets siphoned
off from accounts in India by fraudsters in overseas
locations through cloning of debit cards. This may be
because there is no two factor authentication process for
securing transactions overseas.
59. Borrowers consent not needed to share credit
information: According to RBI, banks and financial
institutions need not seek borrowers consent to share
credit information with credit information companies. The
Credit Information Companies (Regulation) Act provides
statutory backing for sharing of credit information by credit
institutions with credit information companies (CICs).
60. Financial stability council to suggest ways to regulate
spot exchanges: The Financial Stability Development
Council (FSDC), chaired by the Finance Minister, will
discuss ways to regulate the three electronic-based
commodity spot exchanges National Spot Exchange
(NSEL), NSPOT and National Multi Commodity Exchange.
There are two views on regulation of the spot exchanges.
One is by the Forward Markets Commission (FMC) and
other by Warehousing Development and Regulatory
Authority (WDRA). Spot exchanges provide online trading
in commodities as also delivery-based commodity trading.
CAIIB NEW/JAIIB

Page 19 of 19

These exchanges have got exemption under Section 27 of
the Forward Contract Regulation Act to provide one-day
forward contracts.
61. FinMin to farmers rescue: The Finance Ministry has
directed banks to set internal targets for lending against
Negotiable Warehouse Receipts and increase servicing of
such receipts. The Food Ministry has recognised over 125
agricultural commodities, 26 horticultural produces and
registered over 374 warehouses that can issue such
receipts which can be transacted without physical transfer
of stocks from the warehouse or used as collateral to raise
loans.
62. SBI, PNB too start charging for SMS alerts: SBI, Indias
largest lender, will recover Rs 15 (inclusive of service tax)
per quarter as SMS alert charges from its customers with
effect from the quarter ending June 2013. PNB, Indias third
largest public sector bank, will also charge all new as well
as existing customers Rs 15 per quarter for SMS alerts for
transactions with effect from July 1.
63. New norms for life products: All the existing group and
individual products not in conformity with the new
regulations shall be withdrawn from August 1, 2013, and
October 1, 2013, respectively.
64. External debt up 12.9% in 2012-13: The countrys
external debt touched $390 billion in the year ended March
31, 2013, a rise of 12.9 per cent over the previous years
debt. Under the UPAs regime, which began in 2004, Indias
external debt has jumped 3.4 times, or $277.4 billion. A
higher external debt indicates the vulnerability of the
countrys economic position. This means, as on the
reporting date, the country owes $390 billion to different
stakeholders.
65. Basel III norms may restrict banks from extending
long-term infra loans: RBI, in its 7
th
Financial Stability
Report, has stated that in the absence of alternative
arrangements (such as securitisation, take-out finance),
banks may not be able to undertake long-term project
financing.

WISH ALL ASPIRANTS GOOD LUCK FOR RBI EXAM
GOOD LUCK & GOD SPEED

Financial Awareness Rbi Grade B

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FINANCIAL AWARENESS FOR RBI GRADE B EXAM

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