FINANCIAL

INANCIAL A
AWARENESS FOR SBI PO EXAM
Specially compiled for Banker
Bankersadda by Mr. A.K. Gupta, Ex Chief Manager, PNB
P
JAN 2014
1. Sumit Bose is new Finance Secretary: Sumit
Bose, has been designated
ed as the new Fin
Finance
Secretary. He will continue
ue to hold the pos
post of
Revenue Secretary.
2. Harsh Bhanwala is new Nabard
d Chairma
Chairman: The
Centre has appointed Harsh
rsh Kumar Bhanwa
Bhanwala as
Chairman of the National
al Bank for Agricul
Agriculture
and Rural Development (Nabard). Prior to this
appointment, Bhanwalaa was an Execu
Executive
Director at India Infrastructure
ucture Finance Company
Comp
Ltd (IIFCL), a state-owned
ed infrastructure len
lender.
Bhanwala, succeeds Prakash
kash Bakshi, who
w retired
as Nabard Chairman in September.

3.

4.

5.
6.
7.

8.

C.V.R. Rajendran appointed CMD of An

Andhra
Bank: Prior to this elevation,
evation, Rajendran was
executive director at Bank
k of Maharashtra.
Arun Tiwari new CMD of Union
nion Bank
Bank: The
Union Government has appointed
ppointed Arun Tiwari
Tiwa as
Chairman and Managing Director of Union Bank
B
of India. Prior to this elevation,
levation, Tiwari wa
was an
executive director at Allahabad Bank.
Chairman IBA: K R Kamath
math is the Chairma
Chairman of
Indian Banks Association.
Gold traders opt for jewellery
lery impor
imports to
tackle curbs on bullion:
Though Gold bullion attracts
racts import duty o
of 10
per cent, and duty on gold jewellery is 15 per
cent, yet conditions attached
ched to bullion imp
imports
like 80:20 scheme, underr which merchants were
w
to re-export 20 per cent of each gold consignm
consignment
before ordering fresh shipments
ipments makes import
impo of
bullion difficult.
Ministry clarifies on role of shares held
he in
fiduciary capacity: According
ccording to Corpo
Corporate

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Affairs Ministry,
istry, shares held by
b a company in a
fiduciary capacity
apacity should not be
b counted for the
purpose of determining holding-subsidiary
h
relationship.
p. Further, the powe
powers that a company
can exercisee in another compa
company in a fiduciary
capacity (only
nly in the capacity as a trustee) will be
excluded for determining h
holding-subsidiary
relationship.
9. Bank of India plans
lans to get
g
into merchant
banking: Bank
ank of India is planning
plan
to enter the
merchant banking space via BOI Shareholding
Ltd. Public sector banks which have a merchant
banking subsidiary
bsidiary include State
Sta Bank of India,
IDBI Bank and Bank of Baroda.
10. Pradeep Kumar is new MD of SBI: P. Pradeep
Kumar has been appointed by tthe Government as
Managing Director
irector of State Bank of India. Prior to
his elevation,
on, Kumar was the Deputy Managing
Director and
d Group Executive of the Corporate
Banking Group
oup in Indias largest
large bank.
11. Cabinet nod for cancer
ancer institute
insti
at Jhajjar: The
Union Cabinet,
net, has approved the
th proposal to set
up a National
nal Cancer Institute at a cost of Rs
2,035 crore.. The institute, which
whic would be set up
at the Jhajjar
ar campus of the All India Institute of
Medical Sciences
iences in Haryana,
Haryana is likely to be
completed within 45 months.
12. Insurance broking: In major relief
r
to insurance
companies without bancassurance
bancassura
partners, the
finance ministry
istry has asked all public
p
sector banks
to act as insurance
nsurance brokers to boost insurance
penetration in the country. Currently,
Cu
insurance
penetration (the ratio of the percentage
p
of total
insurance premia to gross domestic
dom
product) is
about five per cent. The ministry
min
has advised
banks to leverage their branch
bra
network for
insurance penetration.
enetration. The ccorporate agency
model should
ld be done away with
w
and each bank
to train and
d orient its staff to conform to new
provisions. Currently, bancassurance
bancassu
follows the
corporate agency model, through
throu which a bank
can only tie up with one life, on
one non-life and one

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health insurer to sell their

heir insurance prod
products.
Therefore, non-bank promoted insur
insurance
companies and late entrants
trants to the insur
insurance
sector do not have any bank
ank partner to sell ttheir
policies. As an insurance broker, a bank is li
liable
to consumers, in terms of an insurance po
policy,
unlike a corporate agent.
nt. The liability is h
high,
especially as the bank will sell products
product of
multiple insurers. The customers
ustomers will now have
more choice while buyingg insurance from ba
banks.
The Finance Ministry has sett January 15 as the
deadline for banks to start
tart selling product
products of
more than one insurance company.
13. 8.8 m families live in urban slums
slums: As per a
survey conducted by National
ational Sample Su
Survey
Office (NSSO), about 8.8
.8 million household
househol in
India live in urban slums.. A total of 33,510 sl
slums
are present in urban India,
ia, of which 41 per cent
are notified as slumss by the conce
concerned
municipalities, corporations,
tions, local bodies or
development authoritiess which accommo
accommodate
about 63 per cent of all slum-dwelling
slum
households. Maharashtra,
a, accounts for 23 per
cent of all slums in the country. With 13.5 per
cent of slums, Andhra Pradesh comes sec
second,
followed by West Bengal (12 per cent).
14. Over 80% of rural homes have
ave powe
power, but
60% have no toilets: Ass per Government d
data,
80 per cent of rural households
eholds and 97.9 per cent
urban households had electricity for domestic
dom
use, and 88.5 per cent households
ouseholds in rural India
I
and 95.3 per cent in urban
ban areas had impro
improved
source of drinking water.
ter. The percentag
percentage of
households who get drinkingg water facil
facilities
within premises was 46.1
.1 per cent in rural IIndia
and 76.8 per cent in urban
n India while about 62.3
per cent of rural households
olds and 16.7 per cent
ce of
urban households did not have any bathroom
bathr
facility. 59.4 per cent and 8.8 per cent hous
households
in rural and urban India,
ia, respectively, had no
latrine facilities.
15. Govt draws up list of 23 countries
ries for cur
currency
swap arrangement: The Commerce Ministry has
finalised a list of 23 countries
ntries with which India
I
can trade in local currencies
encies to save precious
pr
foreign exchange and strengthen
rengthen the rupee. The
list includes oil exportingg nations such as An
Angola,
Algeria, Nigeria, Oman,, Iran, Iraq, Venez
Venezuela,
Qatar, Yemen and Saudi Arabia. Other countries
coun
on the list include Russia,
ussia, Japan, Singap
Singapore,
Australia, Indonesia, South
outh Korea, Mala
Malaysia,
Mexico, South Africa and
d Thailand. A currency
curr
swap arrangement for trade basically invo
involves
trading in local currencies
ies where countries pay
for exports and imports with domestic curren
currencies

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at pre-determined
ermined exchange rates instead of
trading in US dollars.
16. Women gaining ground in banks financial
inclusion: The share of female
fema depositors has
increased to
o 28 per cent of the
th total number of
individual deposit accounts in 2012 against 24
per cent in the previous year. The
Th total number of
individual deposit accounts in the country stood
at 77.32 crore
ore in 2012 against 72.50 crore in the
previous year.
ar. In terms of amount,
amou womens share
in the totall individual deposits has improved to
26 per centt in 2012 from 22 per
pe cent in 2011. In
2012, individual
vidual deposits aggregated
agg
Rs 30.78
lakh crore against Rs 28.05 lakh
l
crore in the
previous year.
ear. The share of fem
female loan accounts
in the total number of loan accounts
acco
has gone up
to 15.82 perr cent in 2012. Womens
Wom
share in the
total outstanding
g loans (individuals)
(individ
has risen to
18 per centt in 2012 against 15 per cent in 2011.
The total outstanding loans in the case of
individuals aggregated Rs 11.
11.69 lakh crore in
2012 against
st Rs 9.63 lakh crore in 2011.
17. Insurance policy will cost more from Jan 1:
The Government
ment has widened its service tax net
to cover thee policy premiums paid. Service tax
rates will be 12.36 per cent
cen on Unit-Linked
Insurance Polices (only on charges, such as
mortality and
nd administration), 3.09 per cent on
traditional products ass most of the premium goes
into savings,
s, and 12.36 per cent on term plans.
18. SEBI proposes framework
amework for
f infra trusts: To
aid the financing
ancing and refinancing
refinanc
of long-term
infrastructure
ure projects in India,
In
the capital
market regulator
ulator SEBI has proposed
prop
a framework
for the introduction
oduction of infrastructure
infrastru
investment
trusts (InvIT).
IT). According to th
the 12th Five Year
Plan, India requires an investment
investm
of Rs 65 lakh
crore in infrastructure
frastructure between 2012 and 2017.
SEBI suggested
ested that the trust could either be
floated usingg the mutual fund
fu
structure or
through a separate
eparate structural framework.
fr

19. Consumer inflation

ion linked bonds: Inflation
Indexed National
tional Savings Securities
Secur
- Cumulative,
seek to protect
rotect savings from price rise, by
offering returns
turns over and abov
above inflation at the
retail level.. Only retail investo
investors can buy these
bonds. The minimum investment
investmen size is Rs 5,000.
The interest
st rate is the sum of the prevailing
inflation based
sed on the combine
combined consumer price

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20.

21.

22.

23.

24.

25.

index (CPI) and a fixed

d rate of 1.5 per cent
annually. The inflation rate
te will be reckoned with
a lag of three months, with the September CPI
used in December, and so on. Interest on the
bonds will not be paid out
ut but compounded on a
half-yearly basis.
SME varsity to come up in Hyderabad:
Hyderab
A
national Small and Medium
ium Enterprises (S
(SME)
university will be soon set up at Hyderabad.
Hydera
Another technical training
ing institute was also
being set up in Visakhapatnam
atnam at an investment
investm
of over Rs 150 crore.
Sidharth Birla is new FICCI President:
esident: Sidharth
Birla was elected as President,
dent, FICCI, after the
industry chambers 86th Annual General Meeting.
Mee
Misuse of bank guarantees, letters
tters of cre
credit on
the rise: Due to rising incidents
ncidents of frauds, b
banks
are not in favour of issuing non-fund
fund b
based
facilities, such as bank guarantees
uarantees and letters of
credit, to non-customers.
CCEA ups gas price for RIL subject to bank
guarantee: The Cabinet Committee on Economic
Econo
Affairs (CCEA) approved a Petroleum and Nat
Natural
Gas Ministry proposal to allow RIL to sell KG
KG-D6
block gas at the new price effective
tive April 201
2014. It
also decided against putting
tting any cap/floor p
price
on the gas rates and to maintain the gas p
price
formula approved earlier.
r. RIL can now get the
benefit of the revised gas
as price in return ffor a
bank guarantee for the unmet su
supply
commitment from its KG-D6 block.
Cabinet approves Rs 6,600-cr
cr interes
interest-free
loans for sugar mills: The
he Cabinet Committe
Committee on
Economic Affairs has approved
pproved Rs 6,600 ccrore
interest free loans to sugar
ugar mills to ease ttheir
cane payment burden. The
he CCEA also appro
approved
the exports of sugar without
ithout any quantita
quantitative
restrictions.
Lok Sabha passes landmark Lokpal Bil
Bill: The
Parliament on 18th Dec passed the Lokpal Bill,
paving the way for the
he setting up of anticorruption watchdogs att the Centre and SState
level. The Bill was passed
ed by Lok Sabha on 18th
Dec and by Rajya Sabha on 17th Dec. Highligh
Highlights of
the Bill include (a) Thee Lokpal will consist of a
chairperson and a maximum
um of eight member
members, of
whom half will be judicial
al members; (b) Fifty per
cent of the Lokpal members
ers shall be SC/ST/O
SC/ST/OBCs,
minorities and women; (c) The chairpers
chairperson and
members will be chosen by a selection committee
comm
consisting of the Prime Minister, Speaker of the
Lok Sabha, Leader of thee Opposition in the Lok
Sabha, Chief Justice of India
dia or a sitting Supreme
Supr
Court judge nominated byy the CJI, and an emi
eminent
jurist to be nominated by
y the President of IIndia

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on the basiss of recommendations

recommendation of the first four
members of the selection committee;
com
(d) The
jurisdiction will include all categories
ca
of public
servants and incorporate provisions for
attachment and confiscation of property acquired
by corruptt means, even whi
while prosecution is
pending; (e)
e) Setting up of Lokayuktas
Lo
through
enactment of a law by the State Legislature within
365 days from
rom the date of commencement
com
of the
Act.

26. Rename company

y secretaries
secretari as governance
professionals:: The Company
Comp
Secretaries
Institute has
as written to the Corporate Affairs
Ministry suggesting
ggesting that their members may be
rechristened
d as governance professionals.
pro
27. Status quo on repo
po rate, CR
CRR: RBI maintained
status quo on the repo rate at 7.75 per cent and
cash reservee ratio (CRR) at 4 per
pe cent in its policy
announced on 18th Dec. Explaining
Explai
the rationale
for not hiking
ing the rate in the mid-quarter
m
policy,
RBI Governor
rnor stated that both retail and
wholesale inflation have incr
increased mainly on
account of food prices and vegetable
veg
prices are
likely to fall
all both at the wholesale
who
and retail
levels.
28. Tesco to invest $100 million
milli
in multi-brand
retail stores: British retailer Tesco
T
Plc became
the first global
obal retailer to seek the Governments
nod to enter multi-brand
brand retail
reta trade segment.
Tesco planss to pick up a 50 per cent stake in
Trent Hypermarket
rmarket Ltd, a reta
retail arm of the Tata
group, and enter the multi
multi-brand retailing arena.
The stores will operate under the names Star
Bazaar, Starr Daily or Star Market, and the first few
will come up
p in Maharashtra and
an Karnataka.
29. RBI plans carrot-and-stick
stick approach
a
to curtail
bad loans: To spur banks/financial
banks/fin
institutions
to agree collectively
ollectively and quickly
quic
to a plan of
resolution of stressed assets, RBI
R may consider a
liberal regulatory
ulatory treatment including
in
spreading
the loss on sale of the asset over
ove a period of two
years; allowing
wing takeout financing/refinancing
fina
over a longer
ger period and not
no considering the
same as restructuring.
estructuring. In case
cas lenders cannot
reach an agreement
ment on resolution
resol
of stressed
assets then they will be subje
subject to accelerated
provisioning.
g. Before a loan acc
account turns into a
non-performing
ming asset (NPA)
(NPA), banks should

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identify incipient stress in the account by creating

a new sub-asset category Special Mention
Accounts (SMA) - a standard account, which is
moving towards the substandard category. SMA
will have three sub-categories SMA-NF
(classified on the basis of non-financial signals);
SMA-1 (when principal or interest payment is
overdue between 31-60 days); and SMA-2 (when
principal or interest payment is overdue between
61-90 days). The RBI also plans to set up a
Central Repository of Information on Large
Credits (CRILC) to collect, store, and disseminate
credit data to lenders. Banks will have to furnish
credit information to CRILC on all their
borrowers having aggregate fund-based and nonfund-based exposure of Rs 5 crore and above.
Systemically important non-banking finance
companies (NBFC-SIs) will also be asked to
furnish such information. In addition, banks will
have to furnish details of all current accounts of
their customers with outstanding balance (debit
or credit) of Rs 1 crore and above. The reporting
of an account as SMA-2 by one or more lending
banks/NBFC-SIs will trigger the mandatory
formation of a Joint Lenders Forum (JLF) and
formulation of Corrective Action Plan (CAP). JLF
formation would be made mandatory for
distressed corporate borrowers with aggregate
fund-based and non-fund based exposure of Rs
100 crore and above. The options under the CAP
by the JLF would generally include: rectification
(for regularising the loan account), restructuring
and recovery (when the first two options fail).
30. Relief to banks on asset sales to ARCs: As per
RBI, the excess provision on any bad loan which
is sold to an asset reconstruction company (ARC)
for a higher value can be reversed to the banks
profits.
31. Inflation hits 14-month high: Surging food
prices pushed November wholesale price indexbased inflation to a 14-month high of 7.52 per
cent. Food inflation shot up a huge 19.93 per cent
a near-four-year high. It had risen 18.19 per
cent in October. Vegetable prices shot up an
alarming 95.25 per cent in November compared
with 78.38 per cent in the previous month.
32. India for food security subsidies out of WTO
actionable sops ambit: India will push for
complete exclusion of subsidies given under
public stock holding programmes from the
category of actionable subsidies at the World
Trade Organisation. India has managed to get
only an interim reprieve from legal action against
such breaches at the recently concluded
Ministerial Meeting in Bali.

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33. Third home loan as a commercial real estate

advance: The National Housing Bank has
suggested to the Finance Ministry that home
loans provided to a borrower for the third time
should not be treated as commercial real estate
advance. According to R. V. Verma, Chairman and
Managing Director, NHB, such an approach would
help improve housing stock in the country and
also give a fillip to the rental housing market.
NHB is the housing finance regulator of the
country.
34. SMS alerts: Banks prefer to charge a flat rate:
Instead of linking the charges to the number of
transaction alerts received by customers, banks
are weighing the possibility of recovering Rs 5-10
a month from those opting to receive the alerts
via SMS.

35. Centre to review RBI powers as part of

financial sector reforms: The Financial Sector
Legislative Reforms Commission (FSLRC) has
proposed a financial regulatory mechanism
comprising the RBI, Unified Financial Agency,
Financial Sector Appellate Tribunal, Resolution
Corp, Financial Redressal Agency, Public Debt
Management Agency and the Financial Stability
Development Council. Under the proposed
regulatory structure, the RBI will perform the
functions of monetary policy, regulation and

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supervision of banking and

nd payment systems. The
Financial Stability Development
elopment Council will
function in the systemicc risk and developm
development
category.
36. I-T dept stakes claim to Kingfisher
isher assets:
asset The
Income Tax Department has said a consortiu
onsortium of
banks cannot stake any claim to the asset
assets of
Kingfisher Airlines until the departments du
dues of
over Rs 350 crore are settled.
37. Govt offers more concessions under rural
rura jobs
scheme: Union Minister for Rural Development
Developm
Jairam Ramesh has announced
ced that (a) every
job card holder under MNREGA,
REGA, will be entitle
entitled to
Rs 10,000 to build an individual
ividual toilet. At present,
pre
a job card holder can avail
vail Rs 4,500 to build
bu
a
toilet; the Centre will provide
rovide assistance for the
construction of buildings for women
en self
self-help
federations; MNarega scheme
heme will be conve
converged
with the Indira Awas Yojana
ojana and other hou
housing
schemes for the poor; (d)) to allow the buildin
building of
community storage facilities
cilities for agricul
agriculture
produce in gram panchayats
ats to link the MGNREGS
MGNR
with the Food Security Scheme; (e) if wages are
delayed beyond 15 days,
s, compensation at 0.05
per cent of wage per day of delay will be paid and
this amount will be deducted
ucted from the salar
salary of
the responsible personnel.

38. Public sector banks may have

ave to se
set up
insurance broking arms by
y Februar
February: At
present, banks are allowed
ed to tie up with only one
insurance company and sell products of only that
insurer
under
the
corporate
ag
agency
(bancassurance) channel. According to Finan
Financial
Services Secretary Rajiv
iv Takru, all insur
insurance
products should be available
ilable through the onelakh-plus bank branches.
es. According to the
guidelines finalised by the
he Insurance Regula
Regulatory
and Development Authority,
ority, as brokers, b
banks
will have to cap businesss from their own group
gr
companies at 25 per centt for life insurance aand a
similar cap for non-life insurance business. M
Most
major public sector and
d private sector banks,
ba
such as State Bank of India,
dia, Union Bank of In
India,
Bank of Baroda, Canaraa Bank, Bank of India,
Punjab National Bank, Andhra
ndhra Bank, ICICI B
Bank
and IDBI Bank, havee promoted insurance
insur
companies. Most banks are not in favou
favour of
broking as many of them had promoted insur
insurance
companies. Also, they will have fiduc
fiduciary

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responsibility
ity towards the customer
custo
while selling
insurance products
roducts under the broking
br
regulation.
39. ATM density still low in Indi
India: According to RBI
data outlining
ing global financial inclusion
in
indicators
for 2011, there
here are just 25.4 machines
m
in every
1,000 sq. km in India. This translates
tr
into 8.9
ATMs for every
very one lakh population,
popu
one of the
lowest densities
sities in the world. Bank
B
customers in
China have access to 2,975 machines
mac
in the same
geographical
al expanse, with 49.6
49 ATMs per one
lakh population.
tion. In UK, ATM den
density stands at 261
per 1,000 sq km. But the numb
number of ATMs per 1
lakh population
ation is higher at 122.8
1
ATMs. ATM
density in populous Malaysia stands at 34 per
1,000 sq km, with 56.4 mach
machines per 1 lakh
population.. While the density
densi
in terms of
machines per
er 1,000 sq km is lower
lo
in countries,
such as Indonesia,
donesia, Mexico and the Philippines,
they have more machines per one lakh people
owing to thee lower population. H
However, in terms
of bank branch
anch density, India fares better than
many developing
loping countries. Bank
Ban branch density
in India is 30.4
4 per 1,000 km, compared
co
to just 9.6
in the US, 3.1 in South Africa and 7.9 in Brazil.
China rankss highest in terms of bank branch
density.
40. Funding for specialised
cialised entities:
e
RBI, in its
discussion paper on resolution
resolutio of NPAs, has
stated that RBI will allow
ow banks to extend finance
to specialised
lised entities put
pu together for
acquisition of troubled companies.
compan
However, the
lenders should
ould ensure that these
t
entities are
adequately capitalized. The Reserve
R
Bank will
withdraw the minimum holding
holdin period for any
initial loan sale. However, the bank purchasing
the NPA will
ll have to hold the asset
as in its books for
at least one year before selling the
t asset.
41. Curbs on firms roping
ping in directors
dir
who are on
boards of wilful defaulters:
defaulters The provisioning
in respect of existing
ing loans/exposures
loans/exp
of banks to
companies having director/s,
director/s whose name/s
appear more
re than once in the
t
list of wilful
defaulters, could be set higher at 5 per cent in
case of standard
andard accounts (against
(a
the usual
provisioning
g of 0.40 per cent
ce
for standard
accounts).

42. Coal Regulatory Authority Bill

B tabled: A Bill to
establish an
n independent regulatory
regula
authority for
effective monitoring
onitoring and regu
regulation of the coal

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sector has been introduced

ed in the Lok Sabha. The
objective of the proposed
posed coal regula
regulatory
authority include putting in place regulation that
will be a counter to the practices and method
methods of
a monopolistic producer of coal.
43. Banks may soon begin charging
ng customers
custome for
ATM usage: To make good
od the expenses incurred
incu
on beefing up security,, banks are considering
con
levying a charge on all ATM
TM transactions, be it a
cash withdrawal or a balance
lance enquiry. Currently,
all transactions by customers
tomers at their ba
banks
ATMs are free. The firstt five transactions in a
month at other ATMs are also free. According
Accordin to
initial estimates, the costt per transaction w
works
out to Rs 6 on the basis
is of an average of 200
transactions in each of the 100,000--plus ATMs
across the country.

48.

49.

44. Factory output falls, retail inflation rises:

Retail inflation surged to 11.24 per cen
cent in
November (10.17 per cent
ent in October). Fac
Factory
output contracted in October
ctober to 1.8 per ccent,
though this was partly because
ecause of the base effect
e
in October 2012, IIP growth was at a m
multimonth high of 8.2 per cent.
minority
45. Govt plans education loanss to min
communities for overseas study: Under Padho
Pa
Pardesh (study abroad) scheme, interest sub
subsidy
will be given on education
cation loans taken by
meritorious students belonging
longing to economi
economically
weaker sections of notified
ed minority communities
commun
Muslims, Christians, Sikhs, Budd
Buddhists and
Zoroastrians (Parsis). Thee Padho Pardesh sch
scheme
is being put together by the Ministry of Mino
Minority
Affairs and the Finance
ce Ministry to provide
pro
minority community students with be
better
opportunities for higher education (Masters and
Ph.D level) abroad and enhance ttheir
employability. Thirty per
er cent of the be
benefit
under the scheme will be reserved for fem
female
candidates.
46. IOB gets RBI nod to open second
econd branch
bran
in
Bangkok: Indian Overseas
rseas Bank (IOB) has
received RBI approval for opening a sec
second
branch in Bangkok. IOB is the only Indian lender
le
to have a branch presencee in Bangkok.
47. Export growth slows to 5.86%
% in Nove
November:
Exports grew at a slower
er pace in November,
Novembe at
5.86 per cent, from double-digit
digit increases posted
po

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50.

51.

52.

in the four preceding months. This was mainly

due to a drop
op in shipments of gems
ge and jewellery,
petroleum products and pharmaceuticals.
phar
The
trade deficit,
it, however, shrank to $9.2 billion,
easing pressure
sure on the country
countrys current account
deficit as imports
ports posted a sharp
shar decline of 16.37
per cent during the month.
month However, the
Commerce Ministry is confident
confiden of reaching the
export target
et of $335 billion for 2013-14.
SBI plans study on customer
custome experience: In a
bid to assess
sess the current level
le
of customer
satisfaction and experience, State
Sta Bank of India is
planning to conduct a study across
acro key areas such
as products,
ts, channels and p
processes. To be
conducted across all 14 circles,
circle the study will
identify opportunities
pportunities to improve
im
customer
experience across various areas
area and benchmark
SBIs processes and service against
ag
best-in-class
banks in India
dia and overseas.
Power tariffs may drop as norms for
producers are tightened:
ghtened: Electricity rates may
see a marginal
inal drop if the draft
dra regulations on
power tariffs,
ffs, issued by the Central
C
Electricity
Regulatory Commission (CERC),
(CERC are approved.
CERC reviews
ws tariff regulations every five years.
The existingg regulations (2009-14)
(2009
will expire on
March 31.
Tata Hall opens at Harvard Business School:
Tata Hall was funded by a $50-million gift
donated by the philanthropic
philanthro
subsidiaries of Tata
Group the
he Sir Dorabji Tata Trust
T
and the Tata
Education and
nd Development Trust.
Tru
Garment exports up 15% in April-Oct: Apparel
exports have
ve grown 15.5 per cent
ce the first seven
months of the fiscal to $8.2 bill
billion due to revival
of demand in the US and the EU.
More
remittances
nces
directed
dir
towards
investment purposes:: As per a study by RBI, in
2012-13, the share of transactions
trans
with an
average sizee of individual remittance
remit
of Rs 1 lakh
and above was relatively higher at 45 per cent of
the total value
lue of remittances against
a
27 per cent
in 2009-10.. The trends seem to suggest that over
the years, a higher proportion o
of remittances are
being directed
cted towards investment
inve
purposes.
About 57 per
er cent of the total rremittance inflows
are received in
n terms of dollar, while 16 per cent
of remittances
ces are received in Saudi riyal and
UAE dirham.
m. The share of Euro and pound
sterling are
re 7 per cent aand 8 per cent,
respectively.
y. According to the
th survey, SWIFT
(Society for
or Worldwide Inter-bank
Inte
Financial
Telecommunication)
nication) is the costliest
co
means of
transferring funds.

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53. RBI hits the jackpot with dollar deposit

scheme: Banks have managed to mobilise $34
billion in foreign currency deposits since the
special swap scheme was flagged off in
September. This is much higher than the sums
raised by the Resurgent India Bonds (RIBs) of
1998 ($4.2 billion) and the India Millennium
Bonds ($5.5 billion).
54. MFI customers to be given credit scores:
Equifax Credit Information Services, a credit
information company, is offering scores to help
understand the credit profile of microfinance
customers. The product is called Equifax MFI Risk
Score. Through this product, a microfinance
institution that is a member of ECIS, can obtain
credit reports of its customers.
55. Ministers panel okays Rs 7,200-crore soft
loans for cash-strapped sugar mills:
56. A panel of senior Union ministers, which
considered the demands of the sugar mills, has
decided a soft loan of Rs 7,200 crore to settle the
amounts due to sugarcane farmers. The loan will
be given at 12 per cent interest rate to the sugar
mills.

58.

59.

60.

61.

62.

57. WTO adopts historic Bali package: The World

Trade Organisation (WTO) Ministers at Bali

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adopted the historic five-draft decision

declaration and the 10-document full Bali
Package that addresses the Doha Development
Agenda. The draft proposes an interim
mechanism for safeguarding minimum support
prices to farmers against WTO caps till a
permanent solution is found and adopted.
Defaults on commercial vehicle loans on the
rise: According to India Ratings & Research
report, the performance of commercial vehicle
loans touched a new low in the third quarter (to
September 30) of the ongoing calendar year. The
Fitch Groups credit rating agency, in its quarterly
analysis, found that even creditworthy
borrowers may not remain insulated in times of
economic slowdown.
House panel opposes bank licences to
industrial houses: As per the Standing
Committee on Finance, RBI should desist from
giving new bank licences to industrial houses.
Rebound in FDI flows into India: In its World
Investment and Political Risk Report, by World
Bank, the foreign direct investment (FDI) flows
received by India in the January-March 2013
period reflects a rebound in inflows. This is a
result of the new investment policies put in place
for select sectors, such as telecoms and insurance.
India is by far the largest recipient of FDI in South
Asia, comprising India, Pakistan, Sri Lanka and
Bangladesh. The growth of FDI flows into
developing economies has been dominated by
Brazil, China, and India. In 2012, China received
10.5 times more FDI than India. While India
received $24 billion, China received $253.5
billion.
Moodys outlook turns bleak for India Inc:
Moodys Investors Service said its outlook for
Indian corporates (non-financial) is negative,
reflecting macro-economic challenges over the
next 12 months. It also expects the rupee to
remain volatile due to heightened expectations of
a scale-back of quantitative easing by the US
Federal Reserve in 2014. This could make the
operating environment more challenging for
importers and exporters.
SBI asks officers to meet loan-seekers only at
branch: To ensure that the dealings of its officers
are more transparent, State Bank of India has
asked them not to meet the borrowers, existing as
well as prospective, at any location other than the
branch. An officer should hold meetings with the
borrower only in the presence of other officers.
One-on-one meetings and meetings at the
residence of either the officer or the borrower
should be avoided. Further, talks between the

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63.

64.

65.

66.

67.

bank staff and the borrower,

wer, who may come for a
loan/enhancement of loan limit/ one-time
one
compromise settlement of a loan that has ggone
sour, should ideally bee video recorded. The
emphasis on transparency
ncy in officers dea
dealings
with borrowers comes in the wake of the Cen
Central
Bureau of Investigation recently registerin
registering a
case against SBI Deputy
uty Managing Dire
Director
Shyamal Acharya, Chairman
an of a New Delhi
Delhi-based
private company and others
ers in an alleged bri
bribery
case.
Asset quality of banks will worsen by M
March
2014: According to a report by credit rat
ratings
agency ICRA, the asset quality of the ban
banking
sector is set to worsen with gross non--performing
assets (NPAs) ratio likely
ly to end at 4.2
4.2-4.4 per
cent by March-end 2014
14 from 4 per cen
cent in
September 2013. The absolute
bsolute gross NPAs may
deteriorate to Rs 2.70-2.90
.90 lakh crore by M
March
2014 from 2.37-lakh croree in September this yyear.
Mulling automation to cut operational
rational co
costs of
no frills accounts: The State Bank of India ((SBI)
is looking to develop an automated system that
will help minimise the operational ccosts of no
frills or zero balance savings accounts. T
These
zero balance accounts,
s, has led to higher
hi
operational costs but has not resulted in an
improvement in the CASA
SA (current and sav
savings
account) ratio.
Timely, accurate data not coming
ing from b
banks,
FIs: According to CIBIL
L chief, inadequate and
poor quality data from financial institutions is a
challenge for credit health
ealth assessing age
agency.
CIBIL has four divisionss or bureaus retail,
commercial, mortgage and frauds through
which it serves banks, other financial institut
institutions
and telecom companies.. It will soon launch
laun
a
microfinance division, to
o offer credit informa
information
to microfinance institutions.
itutions. The bu
bureau
currently has over 320 million records from
the retail bureau predominantly
ominantly (305 mil
million)
and the commercial bureau
au (15 million).
Mahila Bank mulls childcare
e allowance
allowanc for
women staff: The Bharatiya
aratiya Mahila Ban
Bank is
planning to give childcaree allowance to its wo
women
employees. The proposed
sed move is aimed at
attracting and retaining talent, especially women
employees in the junior
ior management ggrade
(entry-level officer) and
d middle managem
management
grade (officers of the rank
k of manager and se
senior
manager) in Indias firstt womens bank in the
public sector.
Create awareness among consumers
sumers: RBI has
advised credit information
ion companies (CICs
(CICs) to
create awareness among consumers about credit
cr

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68.

69.

70.

71.

behaviour and credit scores to manage their

finances better.
tter. India stands at 28th rank amongst
189 countries
ies on the ease of getting
g
credit and
has the best ranking amo
amongst the BRICS
economies China is at 73, both Russia and
Brazil are at rank 109.
Current account deficit narrows
na
to 1.2% of
GDP: With a pick up in merchandise
mercha
exports and
a dip in imports,
ports, the country
countrys current account
deficit narrowed
rowed sharply to a more manageable
1.2 per centt of GDP in the second
secon quarter. CAD
the excess of all goods, servi
services and transfers
imported in a period over the total
to exports fell
to $5.2 billion
ion in the July-September
July
quarter from
$21 billion in the year-ago
ago period.
per
This was also
lower than the CAD of 4.9 per cent
c
of GDP in the
previous quarter,
arter, ended June 30,
30 2013.
Core industries output declines
dec
0.6% in Oct:
After a robust
ust 8 per cent rise in September, the
eight core industries output contracted
c
0.6 per
cent in October.
ober. The eight core industries coal,
crude oil,, natural gas, refinery
re
products,
fertilisers, steel, cement and eelectricity had
recorded a 7.8 per cent grow
growth in output in
October last year.
Odisha displacess Gujarat as Indias most
attractive State for investment:
inves
The State
accounts for over one-fifth
fifth of project proposals
across the country in the first 10 months of the
year, which
h were cumulatively valued at Rs 4.7
lakh crore, according to Depart
Department of Industrial
Policy and Promotion (DIPP) da
data.
To ensure stability,, RBI wants
wa
banks to build
up capital buffer: In its draft report on
implementation
ation of counter-cyclical
counter
capital buffer
(CCCB) regime
gime in India, the RBI said it will
endeavour to ensure that individual
individ
banks remain
solvent through
ough periods of stress.
stres The regime also
seeks to ensure
nsure that the banking
ba
sector has
capital in hand
and to help maintain the flow of credit
in the economy
omy during econom
economic downturns and
periods of stress.

72. Mobile payments are gaining

gainin currency: Latest
data show there has been a 1
15-fold increase in
immediate payment service (IMPS) amounts
transferred using mobile phones
p
between
September 2012 and July 2013,
20
as well as a
seven-fold rise in the number
numbe of transactions.

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Seventeen million of the 870 million

llion mobile
mo
phone users in India now access banking serv
services
through their mobile phones.
important
banks
sshould
73. Systemically
maintain higher tier 1 capital:: According
Accordin to
draft framework by RBI, Domestic-Systemi
Systemically
Important Banks (D-SIBs)
s) will have to maintain
additional common equity
ty Tier 1 capital ran
ranging
from 0.20 per cent to 0.80
80 per cent of their riskweighted assets. Common
on equity tier (CET)
(CET 1
capital includes common shares; share prem
premium
resulting from the issue of instruments, inclu
including
CET 1; and retained earnings.
ings. The banks having
havi a
size of beyond 2 per centt of GDP will be selected
sele
in the sample of banks.
74. M. V. Tanksale is IBAs new
w chief exec
executive:
M.V. Tanksale, former Chairman
hairman and Mana
Managing
Director of Central Bank of India, has taken over
as Chief Executive off the Indian Ba
Banks
Association

3.

4.
75. RBI move permitting banks
ks entry into
insurance broking biz hailed: It will exp
expand
coverage and offer more choice to customer
customers. As
per RBIs draft guidelines,
elines, banks will be
permitted to undertake insurance
ce bro
broking
business departmentally.
y. For undertaking the
business, a banks capital-to-risk
risk weighted as
assets
ratio (CRAR) should not be less than 10 per cent
(as against the regulatory
ory minimum of 9 per
cent); and its net non-performing
performing assets rratio
should not be more than 3 per cent. Further,
Further the
bank should have made profits for the last tthree
consecutive years; its net
et worth should not
no be
less than Rs 500 crore; and
nd the track record o
of the
performance of the subsidiaries/
idiaries/ joint ventur
ventures, if
any, should be satisfactory.
FEB 2014
1. Fiscal deficit hits 95% of estimate
ate in 9 mo
months:
According to data published
ished by the Contr
Controller
General of Account, the total
otal deficit at the en
end of
December touched Rs. 5.16-lakh
lakh crore, whic
which is
95.2 per cent of the budget
get estimate of Rs. 5.42lakh crore.
2. GDP growth in 2012-13 scaled
caled down to
decadal low of 4.5%: The downward revision
revi
has been prompted by lower than provision
provisionally

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5.

estimated agricultural
gricultural and man
manufacturing output.
The revised
d GDP growth of 4.5
4 per cent is a
decadal low the previous low of 4 per cent was
recorded in 2002-03.
03. The C
CSO has however
raised GDP growth for 2011-12
2011
to 6.7 per cent
(second revised
vised estimate) from
fro 6.2 per cent.
Economic growth
rowth for 2010-11
2010
was lowered to 8.9
per cent (third
third revised estima
estimate) from 9.3 per
cent projected
cted earlier. Accord
According to the first
revised estimate
imate of national income
inc
for 2012-13,
agriculturall growth stood at 1.4
1. per cent (5 per
cent in 2011-12),
12), and mining declined 2.2 per
cent (0.1 perr cent growth in 201
2011-12).
Core industries output
ut up 2.1%: The latest
output of the
he eight core industries
indust
coal, crude
oil, naturall gas, refinery products,
pro
fertilisers,
steel, cement,
nt, electricity was however lower
than 7.5 per
er cent growth recorded
recor
in December
2012. In April-December
December 2013,
2
eight core
industries output grew a me
mere 2.5 per cent
against 6.8 per cent in same period year. Coal
output fell (-)) 0.6 per cent in D
December year-onyear. Petroleum
leum refinery production
produc
shrank by (-)
1.7 per cent.
Banks to rethink fee on ATM use: One of the six
action points
ts mooted at a recent
recen annual Banking
Ombudsmen
n conference related
relate to fee on ATM
use. In order
der to provide enh
enhanced security at
ATMs, bankss plan to cap the number
nu
of free ATM
transactionss to five a month
month, irrespective of
whether customers
ustomers use thei
their own bank or
another banks
nks ATMs. RBI Dep
Deputy Governor KC
Chakrabarty
y had said it would b
be unfair to charge
customers transacting at their own
o
banks ATMs.
The practice
ice of levying a p
penalty for nonmaintenance
ce of a minimum ba
balance in ordinary
savings bank accounts
ounts was also discussed at the
conference.. Henceforth, banks
bank may consider
converting such accounts into Basic
B
Savings Bank
Deposit accounts.
ounts. The IBA may issue instructions
to discontinue
nue levying a pre-payment
pre
penalty on
all floating-rate
rate loans. Further,
Further it has to ensure
that fixed rate loans are truly
tru fixed and not
referenced to any floating rate b
benchmark. Banks
and the IBA
A will also formulate a policy on zero
liability off customers in electronic
el
banking
transactions,
s, when a bank is u
unable to establish
customer-level
evel negligence. The onus of proving
customer-level
evel negligence would
wou be on the bank
and when such negligence is not established
beyond doubt,
ubt, the benefit of su
such doubt may be
given to the customer.
Need for more specialised
ecialised b
banks: According to
Mr Nachiket
ket Mor, Chairman
Chairma
of the RBIs
committee on financial inclusion,
inclusio there is a need

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6.

7.

to have specialised bankss compared to new full

service banks. The idea of financial inclusion will
be better served in the medium term if
specialised banks like the payments
ts only bank
b
and lending only banks are
re allowed to flourish
flourish.
RBI working on early warning
g system fo
for bad
loans: The framework to revitalise distressed
distre
loans in the economy will
ill be fully effective ffrom
April 1. The framework has been envisage
envisaged as
there is a need to ensure that the banking sys
system
recognises financial distress
ress early, takes pro
prompt
steps to resolve it, and ensures fair recovery for
lenders and investors. The
he main proposals of
o the
framework include early formation of a lend
lenders
committee with timeliness to agree to a plan for
resolution. Main proposals include (a) Lenders
will be given incentives to agree collectively and
quickly work out a debtt resolution plan; be
better
regulatory treatment off stressed assets if a
resolution plan is underway
erway and aaccelerated
provisioning if no agreement
ent can be reached
reached; (b)
To improve the current restructuring
estructuring process
process, the
framework wants independent
pendent evaluation of
large-value restructuringss mandated, with a ffocus
on viable plans and a fair
ir sharing of losses (and
future possible upsides) between the promo
promoters
and the creditors; (c) Borrowing
orrowing could bec
become
more expensive if borrowers
wers do not co-operate
co
with lenders in resolution.
n. Lenders will be given
g
more liberal regulatory treatment
reatment for asset ssales;
(d) Lenders can spread the loss on sale over two
years provided the loss iss fully disclosed. Fur
Further,
take-out financing / refinancing
nancing will be pos
possible
over a longer period and will not be construe
construed as
restructuring; (e) leveraged
ged buyouts allowed for
specialised entities for acquisition of stre
stressed
companies. Sector-specific
ific companies / private
pri
equity firms will be encouraged
uraged to play an ac
active
role in the stressed assets market.

FDI inflows into India in 2013

13 rose 17
17% to
$28 billion: According to the UN Conference
Conferenc on
Trade and Development
nt (Unctad) report for
2013, FDI during the year
ear rose 11 per cen
cent to
$1.46 trillion which is thee highest since the start
of the global economic crisis in 2008. Un
Unctad
forecasts that FDI flowss will rise graduall
gradually in
2014 and 2015, to $1.6 trillion
lion and $1.8 trillion,
tril
respectively, indicating that the worst may be
over for the crisis-ridden
den global econom
economy in

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terms of foreign
oreign investment flows. Global FDI
inflows in 2012 had shrunk 18 per cent to $1.31
trillion duee to the weakening macroeconomic
environment,
nt, slow growth in trade, GDP and
employment.
t. India attracted FDI worth $27.3
billion in 2012
012 which was 13.5
13 per cent lower
than $31.5 billion worth of FDI attracted in 2011.
Brazil, Russian
sian Federation, India
India, China and South
Africa, popularly
ularly known as the BRICS economies,
accounted for 22 per cent of global FDI flows,
which was nearly twice that of
o their pre-crisis
level.
8. Trade deficit with
th China set
se to touch $40 b:
According to data from Directorate-General
Direc
of
Foreign Trade,
ade, Indian exports to China touched
$9 billion between April-November
April
2013, while
imports totalled
alled $34.5 billion.
9. IRDA officials meet
et RBI, bank
ban chiefs to discuss
concerns over insuranc
insurance broking: The
concerns relate
elate to taking the broking route for
selling insurance
rance policies. Three
Thre major concerns
of banks relate to their contracts
con
with joint
venture partners,
rtners, equity arrangement
arran
and noncompete clause
lause with insurance companies. The
other majorr concern is the IRDA
IRD provision that
banks will have to cap business
busines from their own
group companies
es at 25 per cent for life insurance
with a similar
ilar cap on non
non-life insurance business
too. Banks, as insurance broker
brokers, will also have a
fiduciary responsibility
esponsibility to the customer for the
policies sold
d by them. However,
However banks can take a
professional indemnity
ty policy to cover their
liabilities. By selling products
produ
of multiple
insurers, thee customer will have more choice and
will be ablee to choose the product
prod
best suited to
his needs rather
ather than the insurers
insur
product with
whom the bank has a an exclusive
exclu
tie up. Under
the presentt system of distribution
distribu
of insurance
products
through
bank
ba
branches
(bancassurance),
ance), banks act as corporate agents
and sell thee policies of only one
on life insurer, one
non-life insurer
urer and a standalone
standalon health insurer.
10. Currency notes issued
ed before
be
2005 to be
withdrawn: RBI has decided
decide to withdraw
banknotes printed prior to 2005.
20
The rationale
behind move
ve to withdraw b
banknotes printed
prior to 2005
05 is to remove them from the market
as they havee fewer security feat
features compared to
banknotes printed after 2005
2005. The public can
easily identify
tify the notes to be withdrawn as the
notes issued
d before 2005 do no
not have the year of
printing on
n the reverse side.
sid The recall of
banknotes comes in the backdrop
backdr of rising cases
of counterfeit
feit currency and the
t
role of black
money in stoking inflation in the economy.

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11.

12.

13.

14.

According to RBI, it is standard international

practice to withdraw old series notes. Between
April 1 to June 30, 2014, banks will exchange
these notes both for customers and non
customers. From July 1, 2014, members of public
can exchange any number of these old series
notes from the bank branches where they have
their accounts. However, to exchange more than
10 pieces of Rs 500 and Rs 1000 notes, noncustomers will have to furnish proof of identity
and residence to the bank branch in which she/he
wants to exchange the notes. The notes printed
prior to 2005 will continue to be legal tender.
Nanda Kumar is next NDDB chief: Nanda
Kumar, currently Member of the National
Disaster Management Authority, is slated to take
over as Chairman of NDDB from March 1. Nanda
Kumar will be the first ever person from the
Indian Administrative Service to hold the position
of NDDB Chairman.
NBFCs should form a single representative
body: RBI has advised NBFCs to form a single
representative body with the exception for
microfinance where the RBI is keen on a selfregulatory organisation to cater to this segments
needs. The RBI now regulates as many as 10
categories of NBFCs, including those engaged in
asset financing, gold loans, micro-finance, credit
information companies, factoring and residuary
NBFCs. Currently, different segments of NBFCs
have separate associations to pursue their
interests.
Moodys ups growth to 5.5% in 2014: The
report titled India Outlook: Steady Growth,
Lower Risk highlighted there is growing list of
reasons to believe that the Indian economy has
started to turn the corner, albeit slowly, after 30
months of sub-par growth. A pick-up in exports
and normal monsoon besides the prospect of a
better Government after the May election have
boosted business sentiment and investor
confidence. Both the World Bank and
International Monetary Fund have said that the
world economy is showing signs of bouncing back
this year. While the World Bank has forecast
global growth of 3.2 per cent, the IMF has now
projected global growth to be higher at 3.7% in
2014. For 2015, IMF sees global growth at 3.9%.
6% inflation target in 2 years will raise
interest rates: The expert committee set up to
revise and strengthen the monetary policy
framework, headed by Urjit Patel has suggested
that RBI will try to bring down inflation gradually
from 10 per cent to 8 per cent over the next 12
months and to 6% over the next 24 months

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before formally adopting the recommended

target of 4 per cent ination with a band of +/-2
per cent around it. If the RBI accepts the
recommendations of the Urjit Patel Committee,
interest rates are unlikely to come down in 201415 even if the RBI removes its current restriction
on bank borrowing through the repo window.
The committee has also advocated that the real
policy rate should be positive, implying that the
repo rate (currently at 7.75 per cent) should be
higher than the expected CPI inflation (expected
to average around 8.5 per cent in 2014-15). The
report is a step in the right direction as inflation
leads to distortion of facts, such as savings
behaviour, investment decisions and export
competitiveness. Hence, bringing down inflation
cannot be debated for growth.
15. All branches of IDBI Bank to offer export
credit: These branches also support the export
credit (both in foreign currency and rupees)
requirements of exporters-customers of the 1,050
branches.

16. Panel to review commodity futures market

liberalization: The Finance Ministry has set up a
5-member panel to examine whether the
objectives of price discovery and risk
management, which motivated liberalisation of
the commodity futures market, have been

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achieved or not. The panel

el may look at the m
merits
of liberalisation of thee commodities fut
futures
market even from thee aspect of inflation
infla
management. India had till early 2000 ban
banned
trading in commodities futures.
utures. But progressi
progressively
from 2002, all commodities
ities were permitted for
futures trading purely as a hedging mechan
mechanism.
But options contracts are still banned.
17. Banks can now lend up to 75% of value
val
of
pledged gold: RBI has allowed banks to lend
more against pledged gold jewellery, the
thereby
creating a level-playing field for them vis
vis--vis
gold loan companies which can also lend up tto 75
per cent of the value off pledged gold jewe
jewellery
against the earlier 60 perr cent. By allowing banks
b
and NBFCs to lend more
re against the pledg
pledge of
gold jewellery, the central
al bank may be tryin
trying to
break the shackles of thee unorganised sector in
the business of lending against gold.
18. RBI committee to review governance
ernance of bank
boards: The committee
tee will review the
regulatory compliance requirements
quirements of the board
b
of directors of banks,, judge what can be
rationalised and where
re requirements n
need
enhancements, examine the working of the
boards, including whether
er adequate time is b
being
devoted to issues of strategy,
tegy, growth, govern
governance
and risk management. The
he committee will rev
review
central bank regulatory
y guidelines on b
bank
ownership, ownership concentration
ncentration and
representation on thee board, analyse the
representation to see whether
hether the boards have
the appropriate mix of capabilities
apabilities and neces
necessary
independence to govern
rn the institution, and
investigate possible conflicts
flicts of interest in board
b
representation,
including
ing
among
owner
ow
representatives and regulators.
ulators. The Comm
Committee
will also assess and review
iew the fit and pro
proper
criteria for all categoriess of directors of banks,
ba
including
tenor
of
directorship,
board
b
compensation guideliness and any other iissue
relevant to the functioning
ng of the boards and the
governance they exercise.
e. The Committee will
wi be
headed by P.J. Nayak, former
rmer Chairman and CEO
of Axis Bank.
19. CBDT clarifies on TDS on service
ice tax: Tax need
not be deducted at source
urce on the service tax
component on payments made/due to a resi
resident
payee. This will be allowed
ed only in cases w
where
the service tax component
nent comprised in the
amount payable to a resident is indicated
indic
separately in the contractt between the payer and
the payee. In such situation, tax has to be
deducted on the amountt paid/payable wit
without
including the service tax component.

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20. India-EU free trade

de pact lik
likely by early 2015:
The European
ean Union is Indias
India biggest trading
partner.
ible for short-term
sh
credit: As
21. Merchanting eligible
per RBI, short-term
term credit either
e
by way of
suppliers credit
redit or buyers credit
cred will be available
for intermediary
mediary trade transactions or
merchanting.
g. Merchanting or in
intermediary trade
transaction involves purchase of
o goods by Indian
residents from non-residents
residents and
a
then reselling
them to another non-resident
resident di
directly without the
goods touching
hing Indian ports. The merchanting
transactionss will include the discounting of
export leg Letter
etter of Credit by a b
bank authorised to
deal in foreign
ign exchange, as in tthe case of import
transactions.
22. Dip in food pricess eases inflation
inf
to 5-month
low at 6.16% in
n December:
Decemb
Prices of food
articles felll 6.4 per cent month
month-on-month, while
primary articles
ticles were down 5 per
pe cent.
23. CAD to be around
d $50 b:
b According to Finance
Minister P. Chidambaram, the current account
deficit (CAD) for 2013-14
14 should
shou be around $50
billion, down
wn from nearly $88
$8 billion in the
previous year.
ore financial
financ autonomy: The
24. Govt grants CBI more
Centre has told the Supreme Court
Co
that the CBIs
Director will be given the rank of a Government
Secretary with
ith more financial autonomy.
a
The CBI
Director could
uld now approve projects
pro
worth Rs 15
crore in a year. The Director will
w be given a free
hand to appoint
point consultants and
an employ people
on contract in the investigating agency.
25. NCDEX launches gold contract
cont
for hedgers:
The National
al Commodity Derivatives
Deri
Exchange
has launched gold-hedge
hedge contract
con
which will
mimic thee international prices without
considering other charges such as customs duty,
local taxess and premiums. Excluding other
charges will
ill make the contract
contr
value lesser,
compared with the conventional
convention gold contracts,
thus leadingg to lower margin requirement
re
and in
effect help to increase market participation.
pa

26. RBI tightens normss to reduce

reduc banks exposure
to un-hedged foreign
eign currency:
curren RBI has decided
to introducee incremental provisioning
provis
and capital
requirements
ts for banks exposures
expo
to entities
with unhedged
ged foreign currency
currenc exposures from
April 1, 2014. Unhedged foreign currency

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27.

28.

29.

30.

31.

exposures (UFCEs) of corporates

rporates are an area
are of
concern not only for individual
dividual corporates but
also for the entire financial system.
Employees Provident Fund to fetch 8
8.75%:
Central Board of Trusteess (CBT) of the Emplo
Employees
Provident Fund Organisation
nisation (EPFO) h
have
recommended to the Government
vernment 8.75 per cent
rate of interest for 2013-14
14 to its subscriber
subscribers as
against 8.5% last year.
Aadhaar enrolment to cover 60 crore ci
citizens
soon: The Unique Identification
ntification Authority of
India (UIDAI) has said that it would comp
complete
issuing 60 crore Aadhaar
ar numbers iin the next
three-four months, from 55 crore at present.
Rough ride ahead for insurance
ce Web po
portals:
Web aggregators, that is,, Web sites that com
compile
and provide information
n on policies of var
various
insurers, will have to face tighter regula
regulatory
norms. The new regulations
tions rolled out by the
Insurance Regulatory and
d Development Autho
Authority
do not allow these aggregators to dis
display
information pertaining to other pro
product
categories, such as loans,
s, deposits and mu
mutual
funds (which are revenue-generators
generators at pres
present),
or display advertisements or tie-ups
ups with so
socialmedia sites. In a bid to ensure that they display
dis
only factual information,
on, the regulator has
disallowed Web portals from showing rat
ratings,
rankings, endorsements or listing of bestsellers.
bestsel
The IRDA has also introduced
oduced a foreign d
direct
investment limit at 26 per
er cent for ownership
ownersh of
Web aggregators.
SBI to outsource operations of some ATMs:
A
The State Bank of India
dia (SBI) has plans
plan to
outsource the management
nt of some of its ATM
ATMs. It
has called for a Request for
or Proposal (RFP) ffrom
vendors to manage aboutt 7,843 cash dispensers
dispen
(ATMs). SBI had 32,777
77 ATMs as at endSeptember 2013. It hass expanded its network
netw
steadily in the past few years, adding abo
about a
third of its network (about
out 11,000 ATMs) in the
past 18 months.
Piped gas, CNG likely to cost more
ore from April:
The prices of piped cooking
king gas, transporta
transportation
fuel CNG, and electricity generated from gas ccould
go up, as the Governmentt is set to announce the
new price for domestically
ically produced ga
gas in
March. The Government
nt on January 10 had
notified the new gas pricing
ing policy that would
woul be
applicable to all domestically
tically produced nat
natural
gas from April 1 for the next five years. The p
price
could range between $7
7 and $8 a unit w
which
would almost be double the current
rent rates. E
Every
dollar increase in natural
al gas price results in a
hike of about Rs 2.60 a unit
nit for piped natural gas,

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32.

33.

34.

35.

Rs 3 a unit for CNG, and 50 paise

pai a unit increase
for electricity
ity at the retail end. Piped natural gas
is measured
d in standard cubic metre and CNG in
kg.
NELP X will offer
fer uniform licence for all
resources: Lifting all restrictions,
restriction the Ministry of
Petroleum & Natural Gas, in the
th 10th edition of
the oil and gas blocks auction,
auction has proposed to
allow explorers
rers to hunt for all kinds
k
of resources
oil, gas, coal bed methane, or shale. Till now
the country has been offering exploration
e
blocks
under specific
ecific policies: N
New Exploration
Licensing Policy
olicy (NELP) for oil and gas, and CBM
Policy for coal
oal bed methane.
Bank staff can claim
im benefits
benefit even on removal
from service:: The Supreme Court
Co
has ruled that
a bank employee
mployee can clai
claim pension and
encashmentt of leave even when
wh
removed from
service. Thee case pertained to the denial of the
claims of late
ate S.K. Kool who was
w removed from
service as a measure of punishment
punish
by Bank of
Baroda.
Work on DTC,, GST completed:
co
As per
Parthasarathi
thi Shome, Adviser
Advise to the Union
Finance Minister,
nister, the Union Fin
Finance Ministry has
completed the nitty-gritty
gritty on both the Direct
Taxes Code (DTC) and the Goods
Good and Services Tax
(GST). For GST to be impl
implemented, further
clearance from
rom the States is also required.
Dec export growth
wth slows to 3.5%: Indias
exports grew
w at a sluggish 3.5 per
p cent to $26.34
billion in December 2013 compared
c
to the
corresponding year-ago
ago period.
period Despite the low
export growth,
wth, the trade deficit
defici stayed on leash
dropping to
o $62.77 billion in December 2013
compared with $96.14 billion in December 2012.
This was largely
rgely because of the continued fall in
gold and silver
ilver imports, which declined by 68.3
per cent to $1.7 billion after various
va
restrictions
were put in place. Overall, imports
im
during the
month declined
lined by 15.25 per cent to $36.48
billion.

36. Govt notifies new

w gas price
pric mechanism: The
Governmentt has notified the new gas pricing
policy that would be applicable
appli
to all domestically
produced natural
atural gas from April
Ap 1 for the next
five years. However, Reliance Industries and its
foreign partners
rtners BP and Niko Resources in the

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37.

38.

39.

40.

KG-D6 block would have

ave to submit a b
bank
guarantee before they can
n avail themselves o
of the
new price. The new gass pricing mechanism
mechanism, as
suggested by a panel headed
aded by Prime Minis
Ministers
Economic Advisory Council
ncil Chief C. Rangar
Rangarajan,
has been approved by thee Cabinet Committe
Committee on
Economic Affairs (CCEA).
Bank accounts for all can be achieved
chieved th
through
Aadhaar: According to Nachiket Mor, Chair
Chairman
of the RBI-appointed
d financial inclu
inclusion
committee, bank accounts
ts for all can be achie
achieved
in two years if banks can
an ride on the Aad
Aadhaar
enrolment drive that is currently
urrently underway. The
Mor committee, has proposed
osed that banks sh
should
provide every individuall over 18 years a b
bank
account by January 2016.
6. In India, only 36 per
cent adults have bank accounts.
LIC launches new Jeevan Anand
nd plan: LIC has
re-launched its Jeevan
an Anand plan,
plan a
participating non-linked plan which offers an
attractive combination off protection and sav
savings.
This product provides financial
ancial protection aga
against
death throughout the lifetime
etime of the policyholder
policyho
with a special feature wherein
herein it offers cove
cover for
whole life even after payment of maturity
amount.
Pre-paid instrument providers
rs can be tu
turned
into banks: Accordingg to Nachiket Mor,
Chairman of the RBI-appointed
ointed financial inclusion
inclu
committee, payment banks
nks can be created by
converting the existing pre-paid
paid instrument ((PPI)
providers into banks. The committee had
recommended setting up of specialised paym
payment
banks to provide payment
ent services and dep
deposit
products to small businesses
nesses and low
low-income
households. There are 27 such PPIs in the
country.
To protect lenders, mortgage registry to cover
more assets: Banks and lending institutions may
soon be required to file with a central registr
registry all
information on loans sanctioned for gold
jewellery, plant and machinery,
hinery, corporate br
brands
and logos. A legal working
rking group set up by
CERSAI and International
al Finance Corpora
Corporation,
under the chairmanship of M. R. Umarji, Chief
C
Legal Advisor, Indian Banks Association, has
recommended that the scope of CERSAI be
expanded to cover movable
ble assets, tangibles and
intangibles. CERSAI (Central Registry of
Securitisation Asset Reconstruction
onstruction and Secu
Security
Interest of India), a state-owned
owned entity, curre
currently
operates a central registry with w
which
information on all equitable
ble mortgages is file
filed by
lending institutions. This legal working group has
also recommended to thee Finance Ministry that

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the scope of CERSAI be expanded

expan
to cover all
kinds of mortgage transactions.
transactio
CERSAI was
established with the main objective
objec
of protecting
the lenderss against frauds/misrepresentations
frauds/m
and preventing
nting multiple financing
finan
against the
same asset (immovable proper
property in the current
scenario).
41. Govt confident of meeting export target of
$325 billion: The Commerce
Comme
Ministry is
confident off meeting the export
expo target of $325
billion this fiscal with most sectors,
sec
except some
such as pharmaceuticals
icals and gems
g
& jewellery,
doing well.
42. Crisil sees loss off 14 million jobs in non-farm
sector over nextt 6 years: About 12 million
people willl return to work in farms or related
activities in
n the period between
betwee FY 2013-19 as
non-farm jobs will likely vanish
vanis in thin air due to
slow economic
omic growth and policy paralysis,
according to ratings agency Crisil.
If the
projections come true, this will mark the reversal
of a trend seen
een in the previous seven-year period
between FY 2005-12
12 that saw a loss of 37 million
farm-related jobs.

43. Offshore wind energy

nergy agency
agen on cards: The
Ministry of New and Renewable
Renewabl Energy (MNRE)
is making efforts to set up a National Offshore
Wind Energy
gy Agency to explore wind generation
potential in the offshore areas.
44. Govt to clearly define
ine dire
direct sellers for FDI:
The Government
ment is working on a clear definition
for multi-layer
yer marketing and direct
d
selling in the
foreign direct
ect investment (FDI) policy to remove
ambiguitiess on the legal sstatus of foreign
companies operating in the sector.
s
The direct
selling industry
ustry in India is valued
va
at Rs 7,000
crore and is growing at over 10 per cent per
annum. In multi-layered
layered di
direct selling, the
company distributors
istributors sponsor new
n sellers who, in
turn, bring in more suppliers. Sales credits are
earned on the
he basis of products sold by the main
distributorss and their sponsored
sponsor vendors. Since
the FDI policy is silent on multi-layered
marketing and direct selling, such
su companies run
the risk of being clubbed with fraudulent ponzi
and pyramid
id schemes and getting penalised
under the Prize Chit and Money
Mone Circulation Act,
1978.

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45. Aditya Birla group is top corporate donor to

Cong, BJP: According to Association of
Democratic Reforms (ADR), business houses
were the biggest donors to political parties,
accounting for 87 per cent of their total
contribution from known sources. Over the last
eight years, business houses donated Rs 379
crore to political parties. The donations were
made by companies across sectors, including
manufacturing, power, oil, mining and real estate.
46. Soon, bank customers will get live video
assistance: Some banks like Union Bank of India,
Bank of Baroda, Andhra Bank are preparing to
introduce interactive televisions which will guide
customers and help resolve their issues. These
will be connected live to a central studio, where
bank personnel will be available round-the-clock
to interact with customers.

48.

49.

50.

51.

47. SEBI notifies norms for portfolio investors:

The Foreign Portfolio Investor (FPI) Regulations
formed on the recommendations of the K.M.
Chandrasekhar Committee on rationalising
investment routes and monitoring foreign
portfolio investments has been notified. The
regulations merge foreign institutional investors,
sub-accounts and qualified foreign investors into
a single investor class called FPI. SEBI has
decided to do away with prior direct registration

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of FIIs and sub-accounts. This would be done by

designated depository participants authorised by
the regulator and would be subject to know-yourclient compliance. FPIs have been divided into
three categories. They would receive the same tax
treatment as FIIs. FIIs and QFIs that are already
registered would be deemed to be FPIs until their
registration expires. FIIs are allowed to buy and
sell securities on payment of conversion fees till
either the their FII/sub account registration
expires or a certificate of registration as FPI is
obtained. However, QFIs have been given one
year to re-register as FPIs.
100% FDI in pharma stays: India will continue
to allow 100 per cent Foreign Direct Investment
(FDI) in existing pharmaceutical companies.
Domestic companies selling their facilities or
operations to foreign players, however, will not
be barred from starting a fresh venture in the
same area as the non-compete clause will not
apply in deals except in special cases. The DIPP
had sought reduction of FDI limit for brownfield
pharma projects from 100 per cent to 49 per cent
in critical areas as it feared that acquisition of
Indian companies could vitally affect availability
and affordability of generic (off-patent)
medicines.
IRDA chief bats for single product for all
insurance needs: According to T.S. Vijayan,
Chairman,
Insurance
Regulatory
and
Development Authority, a single product covering
all basic needs of insurance will help increase the
reach of insurance.
Health cover, pension plans to drive growth in
insurance sector: According to an AssochamErnst and Young Report, Health insurance and
pension plans will drive growth in the Indian
insurance industry. However, the distribution
and claim management would continue to be
major challenges.
Court order puts spoke in banks loan
recovery process in non-metros:
As per
Section 14 of the Sarfaesi Act, where the
possession of any secured assets is required to be
taken by the secured creditor the secured
creditor may, for the purpose of taking
possession or control of any such secured asset,
request, in writing, the Chief Metropolitan
Magistrate or the District Magistrate within
whose jurisdiction any such secured asset or
other documents relating thereto may be situated
or found, to take possession thereof. ,The Madurai
Bench of the Madras High Court observed that
secured creditors in metropolitan areas could
approach either the Chief Metropolitan

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52.

53.

54.

55.

Magistrate or District Magistrate but cannot

approach Chief Judicial Magistrate for relief under
the SARFAESI Act.
RBI hikes NBFCs gold loan limit to 75% of
value: NBFCs can now give up to 75 per cent, up
from 60 per cent, of the value of the gold
jewellery pledged as loan. In March 2012, the RBI
had directed NBFCs not to give more than 60 per
cent of the value of gold jewellery pledged in view
of the rapid pace of their business growth and the
nature of their business model, which has
inherent concentration risk and is exposed to
adverse movement of gold prices.
DIPP seeks stakeholders views on FDI in ecommerce: The existing policy does not allow
FDI in business-to-consumer (B2C) e-commerce
activities. But 100 per cent FDI is allowed in
business-to-business (B2B) e-commerce and in
the market place model under which the eretailer does not sell directly to consumers but
provides a platform to other sellers.
Every adult should have bank account by Jan
2016: According to RBI appointed Nachiket Mor
Committee on Comprehensive Financial Services
for
Small
Businesses
and
Low-Income
Households, every resident should be issued a
Universal Electronic Bank Account automatically
at the time of receiving their Aadhaar number by
a high quality, national, full-service bank. An
instruction to open the bank account should be
initiated by the Unique Identification Authority of
India upon the issuance of an Aadhaar number to
an individual over the age of 18. By January 1,
2016, the number and distribution of electronic
payment access points would be such that every
resident would be within a 15- minute walking
distance from such a point anywhere in the
country.
Create one agency to redress all customer
complaints: The Committee on Financial Services
has suggested that a unified Financial Redress
Agency (FRA) across all financial products and
services should be created by the Ministry of
Finance to solve consumer complaints within 30
days. The FRA, which will in turn coordinate with
the respective regulator, should have a presence
in every district in the country and customers
should be able to register complaints over the
phone, using text messages, internet, and with the
financial services provider directly. The provider
should then forward the complaint to the
redressal agency and customers should have their
complaints resolved within 30 days of
registration of the complaint with the FRA.

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56. Specialised banks for low-income households:

The RBI-appointed committee on financial
inclusion has recommended that the central bank
should set up specialised banks called Payments
Bank to provide payment services and deposit
products to small businesses and low-income
households. Since the new bank will be dealing
with poor customers, such a bank must be
allowed to accept a maximum deposit of not more
than Rs 50,000. Such a bank will earn from the
payment services it offers, such as money
transfers and online payments, as well as by
deploying the deposits in secure government
securities (G-secs). In order to protect the money
of the poor customer, such a bank will not be
allowed to lend in the market.

57. Priority lending targets may be revised based

on sectors, districts: To enable greater regional
and sectoral specialisation among banks, RBI may
revise the priority sector lending (PSL) targets
and require banks to meet an adjusted PSL target
of 50 per cent against the current requirement of
40 per cent.
58. Set up State finance regulatory panel: The
Committee on Comprehensive Financial Services
for
Small
Businesses
and
Low-Income
Households has suggested that a State Finance
Regulatory Commission (SFRC) could be created
into which all the existing State Government-level
regulators could be merged. Functions such as the
regulation of non-government organisations,

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microfinance institutions
ns and local mo
money
services business could bee added on to the SF
SFRC.
59. Bank design horizontal & vertical
vertical: The
committee on financial inclusion has come up
with two broad designs for
or the banking syste
system in
the country the Horizontally
zontally Differenti
Differentiated
Banking System (HDBS)
S) and the Verti
Vertically
Differentiated Banking System
ystem (VDBS). In H
HDBS
design while all configurations
ations are deposit
deposit-taking,
the variations between them
em are on account o
of: (i)
the ways in which they
ey originate risks and
transmit them throughout
ut the system; and (ii)
their size and focus whether regional
regiona or
sectoral. The HDBS has six design categorie
categories
national bank with branches;
ches; national bank with
agents; regional bank; national consumer
bank; national-wholesale bank;
k; and natio
nationalinfrastructure bank. Thee rational for VDBS
VDB is
usually linked to niche capabilities
apabilities such as credit
cr
under-writing for specialised
lised business segments
segm
or network management in the case of paym
payments.
The HDBS has five design categories payments
network operator; payments
ents bank; full-service
full
bank; wholesale consumer
er bank; and whole
wholesale
investment bank.

60. CAG can audit private telcos: The Delhi High

Court has ruled that the Comptroller and Auditor
Aud
General can audit revenues
ues of private compa
companies
if they have an impact on Governments incom
income.
61. Services PMI down for sixth
xth consec
consecutive
month: The HSBC PMI Index shrank to 46.7
46 in
December from 47.2 in November. A rea
reading
above 50 indicates growth
th while anything be
below
50 denotes a contraction.
foreign
62. FinMin to re-examine capital controls, fo
portfolio investment norms: The Ministry has
extended the term of the Sahoo Committee, w
which
recently submitted its recommendations on
depository receipts. In the second phase, the
nine-member panel headed
eaded by M. S. Sahoo
Sahoo, has
been asked to review thee framework on exte
external
commercial borrowingss (ECBs) and for
foreign
currency convertible bonds
onds (FCCBs). Bes
Besides
reviewing the framework
rk of direct listin
listing of
Indian companies abroad,
d, the panel will loo
look at
dual listing of corporates.
63. Banks approach RBI to hike ATM transa
transaction
fee: Banks have mooted
ed the charge on ATM
transactions to pay for the increased security
secu

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costs at ATMs,
TMs, put in place by many State
Governments,
ts, following the grievous
gri
attack on a
woman inside
ide an ATM kiosk in Bangalore last
November. Currently, there is no cap on the
number off transactions that a customer can
undertake at his own banks AT
ATM. Given that the
country hass about 1.40 lakh ATMs at present,
banks will roughly see an outgo
outg of about Rs 560
crore a month on account of providing
p
security
alone.
64. Company Law Tribunal
ribunal: The Corporate Affairs
Ministry hass invited applications
application for filling up two
posts of technical member in the National
Company Law Appellate Tribunal
Tr
(NCLAT).
Under the new company law, NCLAT will hear
appeals against
gainst the orders of the National
Company Law Tribunal, an o
overarching body
being set up
p for implementation
implementatio of company law
in India.
65. Early warning system
stem to help
he SBI zero in on
stressed loans: Faced with a pile of bad loans,
State Bank of India plans to set up an earlywarning system
stem to identify signs
sign of stress in such
loans so that
at it can act immediately
imme
to resolve
them. The move comes in the w
wake of the banks
gross non-performing
performing assets increasing
in
by about
40 per centt to Rs 64,206 crore
cro at the end of
September 2013 against Rs 49
49,202 crore at the
end of September 2012.
66. SEBI names 3 qualified
ualified cl
clearing houses for
securities market: The capital market regulator
SEBI has said
aid that National Securities
S
Clearing
Corporation
n Ltd (NSCCL), Indian Clearing
Corporation
n Ltd (ICCL) and MCX-SX Clearing
Corporation
n Ltd (MCX
(MCX-SXCCL) are the only
qualified central
entral counterparties
counterpartie (QCCPs) in the
Indian securities
urities market. Clearing Corporations
are designated
nated as Market
Marke
Infrastructure
Institutions for oversight considering
co
its systemic
importance in securities markets
market regulated by the
SEBI. They
y are also subject
subjec to rules and
regulations that are based on International
Organisation
n of Securities Commissions
Com
(IOSCO)
Principles for Financial Market
Marke Infrastructures
(PFMIs). These
hese principles were issued by IOSCO
in April 2012
12 to enhance the safety
sa
and efficiency
in payment,, clearing, etc.

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67. Despite legal challenges, Govt moves ahead on

Company Law Tribunal: The Government is
moving ahead with the formation of the National
Company Law Tribunal (NCLT), an overarching
body being set up for implementing most
provisions of the new company law, even as the
outcome of a petition filed before the Supreme
Court by the Madras Bar Association is awaited.
68. RBI panel enlists 2 administrators for setting
financial benchmarks: According to an RBI
committee, the Fixed Income Money Market and
Derivatives Association of India (FIMMDA) and
the Foreign Exchange Dealers Association of India
(FEDAI) may be designated as administrators for
all rupee interest rate and foreign exchange
benchmarks, respectively. FIMMDA is a voluntary
market body for the bond, money and derivatives
markets. FEDAI is a self-regulatory body, whose
major activities include framing of rules
governing the conduct of inter-bank foreign
exchange business and liaison with the RBI for
reforms and development of the forex market.
Financial benchmarks are primarily used for
pricing, valuation and settlement purposes in
financial contracts.
69. To boost supply, Govt relaxes norms for mega
power projects: The Government has decided to
ease the Mega Power Policy in a move that will
help nearly 25 projects with investments of more
than Rs 1.6 lakh crore. This is expected to
increase power availability in the country and
also ensure that consumers are charged
reasonably for electricity supply. The amendment
allows project developers to tie up for only 65 per
cent of generation capacity through competitive
bidding with the State distribution utilities
against the earlier norm of 85 per cent. The
amendment allows the developer to sell up to 35
per cent of installed/net capacity under regulated
tariff as per the specific host State policy.
70. In FY13, export markets remain almost same:
According to statistics put out by RBI, the
destination of Indias exports during the first half
of the current fiscal remained broadly the same as
the previous year. India exported goods worth
$300 billion in fiscal 2013. In the first six months
of the current fiscal, exports have nearly touched
$152 billion. About a third of the exports goes to
OECD countries, which include the European
Union, North America (US/Canada), Australia and
Japan. About a fifth of the exports goes to OPEC
countries (Indonesia, Iran, Iraq, Kuwait, the UAE
and Saudi Arabia). Forty-three per cent of the
exports were sent to other developing countries
(such as those in the SAARC region, other parts of

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Asia and Africa) in the first six months ending

September 2013.
71. Inflation, job creation are the challenges for
Govt: According to PM, there are three main
challenges on economic front creating jobs in
the manufacturing sector, controlling the
persistent inflation, and curbing corruption.
72. Cabinet nod for conversion of pref shares into
equity in 3 banks: The Union Cabinet has given
its nod for conversion of perpetual noncumulative preference shares held by the
Government in three public sector banks
Indian Bank, UCO Bank and Vijaya Bank into
equity shares. PNCPS amounting to Rs 400 crore,
Rs 1,823 crore and Rs 1,200 crore in Indian Bank,
UCO Bank and Vijaya Bank, respectively, will be
converted into equity in favour of Central
Government.
73. Government cancels Rs 3,500-cr chopper deal
with AgustaWestland: The Government has
scrapped the controversial Rs 3,500-crore deal to
purchase 12 helicopters from AgustaWestland.
The deal was cancelled following allegations of
unethical
dealings
by
Italian
company
Finmeccanica in the sale by its Anglo-Italian
subsidiary AgustaWestland to the Ministry of
Defence. It is alleged that kickbacks were paid to
win the contract.

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74. RBI seeks taxmans feedback on bank licence

aspirants: RBI has asked the income-tax
authorities information on six issues related to
tax compliance of the 25 groups that have applied
for starting a bank. The issues include whether
the groups were subjected to any search and
seizure/survey in the past five years; whether
any penalty was imposed for concealment of
particulars/furnishing inadequate particulars of
income; whether the entities are facing any
prosecution proceedings under the Income-Tax
Act and/or whether they were convicted for any
offence under the Act; whether the entities have
filed their returns up-to-date; whether any tax
dues are outstanding; and whether the entities
are complying with the provisions relating to
deduction of tax at source.
75. Service tax on insurance takes effect: From 1st
January 2014, the services related to insurance
like third-party administrators (TPAs), brokers,
agents, insurance repositories, Web aggregators,
referral entities and surveyors will be subject to
service tax.
76. Farm, industrial sectors account for most of
the bad loans: As per RBIs Financial Stability
Report, gross non-performing assets (NPAs) are
likely to go up to 4.6 per cent of total loans by
September 2014 from 4.24 per cent this
September from Rs 1.67-lakh crore to Rs 2.29lakh crore. In terms of gross NPAs, agriculture has
the highest ratio at 5.5 per cent at end-September
2013. The sector is followed by industries at 4.9
per cent. Share of retail loans in gross NPAs stood
at 2.2 per cent, while restructured standard
advances to total advances were 0.3 per cent at
end-September. Public sector banks have the
lowest share of the retail segment in their loans
portfolio around 16%.
77. Cabinet okays setting of 58 medical colleges:
The Cabinet Committee on Economic Affairs
(CCEA) has approved the establishment of 58
new medical colleges which will be attached with
the existing district or referral hospitals.

3.

4.
MAR 2014
1. India, Dubai reach air services pact, to increase
seats by 11,000: The increase in the seats is to be
in three phases, extending up to March 2015.
2. DK Saraff to head ONGC: DK Saraff, MD of ONGC
Videsh, will take over as the new Chairman from
March 1. He will hold the post till September
2017.

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IRDA eases norms to reduce agent attrition:

The Insurance Regulatory and Development
Authority (IRDA) has decided to remove
minimum persistency criteria (the minimum
number of policies sold by agents that have to be
renewed), leaving it to the board of each life
insurer to have their own norms on persistency.
In 2011, the IRDA had put in place a minimum
persistency rate of at least 50 per cent. Last year
the IRDA had also waived off the condition of
fresh training for agents whose licences had
lapsed. Further, in a bid to attract more agents
into the life insurance industry, the regulator
reduced the cut-off percentage in the prerecruitment examination from 50 per cent to 35
per cent.
Tiny deposit collectors get a minimum wage
hike: The Tribunal has ruled that on a monthly
collection of Rs. 3 lakh, a deposit collector should
get fallback wages of Rs. 8,000 and conveyance of
Rs. 750 a month. On a monthly collection of over
Rs. 3 lakh and up to Rs. 5 lakh, a deposit collector
will earn an incentive of 3 per cent. For a monthly
collection of over Rs. 5 lakh, a deposit collector
will earn an incentive of 2 per cent. The award
will be applicable retrospectively from July 19,
2005, the date when the banks were summoned
to appear before the Tribunal. Currently, a

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5.

6.

7.

8.

9.

deposit collector / agentt gets fallback wage

wages of
Rs. 750 on a collection of Rs. 7,500 per month
month. For
collections above Rs. 7,500/month,
500/month, they ge
get an
incentive of 2 per cent off the amount collecte
collected. In
case a deposit collector mops up Rs. 3 lakh per
month, he can take home only Rs. 6,600 ( Rs. 750
as fallback wages plus Rs. 5,850 as incen
incentive
remuneration).
Axis Bank rolls out e-KYC account
ccount op
opening
service: The customer can approach the banks
ba
business correspondents,
s, who will access the
MicroATM (a biometric handheld
andheld device) to o
open
an Aadhaar-based account through e-KYC
KYC (kn
(knowyour-customer). For the Aadhaar-based
based ee-KYC
mode of account opening,
g, Axis Bank has tied
tie up
with the National Payments
nts Corporation of IIndia
and the Unique Identification
tion Authority of Ind
India.
Third party motor insurance rates likely to be
market driven by year-end: The rates are li
likely
to go up from April this year, consequent tto an
IRDA proposal for rate hikes of between 25 per
cent and 137 per cent. Currently, third p
party
motor insurance is thee only segment w
where
premium rates are fixed
xed by the insur
insurance
regulator. Third party liability premium rrates
have been going up for thee last two years.
Lending rate for fresh loans rise faster than
for existing ones: According
rding to RBIs quar
quarterly
data on WALR, the weighted
ted average lending rate
(WALR) for fresh loans rose
ose 57 basis points ffrom
11.46 per cent (in the April-June
June period) to 1
12.03
per cent (in the July-September
eptember period). The
WALR for existing loanss nudged up 11 b
basis
points from 12.20 per cent to 12.31 per cent.
Rs. 3,000-cr PF deposits lying
g unclaimed:
unclaime As
per the CAG report, 8.53 per cent of the total
tot of
8.55-crore accounts were
ere inoperative as on
March 2012. The number
ber of such acco
accounts
zoomed to over 73 lakh in 2011-12
12 from ove
over 25
lakh in 2006-07.
United Bank of India chief quits
uits as bad
bad-loan
crisis boils over: Archana
ana Bhargava, CMD of
United Bank of India (UBI),
BI), opted for volun
voluntary
retirement with effectt from February 20.
Bhargavas resignation comes in the wake of a
surge in bad loans at UBI, leading to a loss
los of
around Rs. 1,200 crore in
n the third quarter. U
UBIs
gross non-performing assets
ssets (NPAs) jumped
jumpe to
Rs. 8,546 crore in the October-December
December qua
quarter
(including a fresh slippagee of Rs. 3,172 crore).
crore) As
of December 31, 2013, UBIs
BIs gross NPA
NPAs stood at
10.82 per cent of totall advances, one of the
highest among Indian banks.

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10. I-T Dept shoots letters to 50,000 non-filers:

The Finance
ce Ministry has st
stated that it has
identified 21.75
1.75 lakh people for not filing income
tax returns and letters have been sent to 50,000
individuals. The Income-Tax
Income
Department
identified these non filers on the basis of a
business intelligence project
project. This identifies
Permanent Account Number (PAN)
(P
holders who
have not filed income tax returns
re
and about
whom specific information
ormation is available
a
in Annual
Information
n Return (AIR), Ce
Central Information
Branch (CIB)
IB) data and TDS (Tax
(
Deducted at
Source) or TCS (Tax Collected at Source) returns.
11. Fertiliser subsidy
y may touch
touc Rs. 90,000 cr in
2014-15: Fertiliser subsidy is estimated to rise
to Rs. 90,000
00 crore for the 2014-15
201
fiscal. This is
30 per centt more than the estimate
esti
made in the
interim budget.
dget. The estimate is based on the
carry-over from the current fiscal and new
demand for subsidy.
12. Banks as brokers:
s: Life Insurance
Insu
Council has
no firm view:: The Life Insurance
Insura
Council is an
apex industry/consultative
try/consultative bod
body representing 24
life insurers
rs in the country. The Ministry of
Finance hass asked public sector banks to take up
compulsory
y insurance brokerage
brokera
from January
15, 2014, which has however,
howeve been kept in
abeyance. Ass a corporate agent, a bank is allowed
to sell products
oducts of a single
singl life insurance
company. But as a broker, it can sell multiple
policies of different
ifferent insurers.
13. RBI panel to examine
amine recommendations
rec
on
financial sector reforms: RBI has decided to
constitute a committee to examine the
recommendations
dations of the Financial Sector
Legislative Reforms Commission (FSLRC) relating
to capacity building in the banking
bank
sector. It will
examine if the members on bank
ban boards need to
be certified by way of say, an appropriately
designed course
urse which could be made mandatory
for every individual before appointment
ap
to the
board of a bank. The committee
committee, which is headed
by G Gopalakrishna,
lakrishna, Executive Director, Reserve
Bank of India, has been tasked with the
responsibility
ity of identifying capacity building
requirements
ts keeping in view the
th role of financial
sector and what it should delive
deliver.

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14. Weakening bank balance-sheets is a worry:

The International Monetary Fund (IMF) has
cautioned Indian authorities to closely monitor
the deteriorating corporate financial position and
weakening bank balance sheets of banks,
especially public sector banks. There is need to
strengthen prudential regulations of banks asset
quality classification and concentration risks.
15. State Bank of India to go slow on hiring: The
countrys largest lender, which used to hire
30,000-35,000 employees annually till a few
years ago, has slowed down fresh recruitments
since last year amid rising staff expenses and
other concerns.
16. Indian banks abroad see credit growth rise
31.7%: According to Reserve Bank of Indias
survey on international trade in banking services,
Indian banks operating overseas witnessed
higher credit growth compared to their foreign
counterparts operating in India. According to the
survey for 2012-13, growth of credit extended by
Indian banks branches operating abroad
increased by 31.7 per cent to Rs. 5,85,570 crore
($ 107.7 billion). Credit extended by foreign
banks operating in India increased 27.5 per cent
to Rs. 3,07,700 crore billion ($56.6 billion)
during 2012-13. Deposits mobilised by Indian
bank branches operating abroad increased 45.5
per cent to Rs. 3,93,070 crore ($72.3 billion)
during 2012-13. In case of foreign banks
operating in India, deposit growth moderated to
3.2 per cent at Rs. 2,83,510 crore.
17. Govt to take back coal blocks allotted to 50
companies: According to the Government, blocks
that were not able to achieve the requisite
milestones have been de-allocated.
18. Parliament passes Telangana Bill: Both Lok
Sabha and Rajya Sabha have passed Andhra
Pradesh Reorganisation Bill, 2014, to create a
separate Telangana State.
19. Rice exempted from service tax: Rice was
originally exempted from service tax as it was
classified as agriculture produce. However, the
Finance Ministry later said that only paddy was
agriculture produce, while rice was a processed
item. By virtue of the definition of agricultural
produce in Finance Act 2012, read with the
Negative List, storage or warehousing of paddy
was excluded from the levy of service tax. Rice
was not. Budget 2014-15 has proposed to exempt
loading, unloading, packing, storage and
warehousing of rice from service tax.
20. Banks can continue as agents of insurers:
Insurance Regulatory and Development Authority
(IRDA) is renewing the corporate agency licences

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21.

22.

23.

24.

of banks having tie-ups with insurers. At present,

banks have a corporate agency arrangement with
insurance companies to sell insurance products.
Under this arrangement, they are allowed to sell
products exclusively of one life insurer, one nonlife insurer and a standalone health insurer. IRDA
has not yet set a deadline on when banks should
become insurance brokers. In December, the
Finance Ministry issued a notification asking
banks to become insurance brokers, whereby
they will sell policies of multiple insurers. This
move is aimed at creating a level-playing field for
non-bank promoted insurance companies vis-vis bank-promoted insurance companies. Major
public sector and private sector bankshave
promoted insurance companies. Most of these
banks are not keen to become insurance brokers
as they have contractual obligations with joint
venture partners of insurance companies.
Inflation tumbles to 8-month low of 5.05% in
Jan: Led by softening food prices, inflation as
measured by the Wholesale Price Index (WPI)
cooled to an eight-month low of 5.05 per cent in
January. The WPI inflation in January is the
lowest since May 2013 and significantly lower
than the 7.31 per cent figure in January 2013.
This moderation comes on the heels of Consumer
Price Index (CPI) inflation hitting a two-year low
of 8.79 per cent in January. There was, however,
no respite on the core inflation front, with the
rate inching up to 3 per cent in January from 2.8
per cent in December 2013.
SBI tweaks recovery model: With bad loans
surging 27 per cent year-on-year to touch Rs.
67,799 crore towards the end of December, State
Bank of India has got into a non-performing asset
control mode, tweaking its recovery model and
setting up committees to check further slippages.
Govt rakes in Rs. 61,162 cr in spectrum sale:
The spectrum auction, which ended after 10 days
of intense bidding, has thrown up Vodafone,
Airtel and Reliance Jio as clear winners giving
these operators spectrum that can be used for
high-end data services using 3G and 4G
technologies.
Regulator
sets
seven-board
cap
for
independent directors: In a move to promote
good business practices, the SEBI board has
approved new corporate governance norms that
restrict the number of independent directors on a
company board, spell out whistleblower policies,
and institute checks on salaries of key managerial
persons, among other things. The board has now
revised its listing agreement, bringing it in line
with the requirement of the provisions of the

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Companies Act, 2013. The

he new norms will ccome
into effect from October 1. Under the new rules,
r
an individual can serve
ve as an indepen
independent
director on a maximum
um of seven li
listed
companies. The Board also decided that iif an
individual is a whole-time directorr in a li
listed
company, he can serve
ve as an indepen
independent
director in a maximum off three companies. A
Also,
if one has completed five
ve years or more aas an
independent director, he will be eligible for just
one more term of five years. Managerial
Manag
remuneration will be decided
cided by a compensa
compensation
committee headed by an independent directo
director.

25. Moderation in farm support prices will

wil help
ease inflation: Moderation
ration in agricult
agricultural
support price will ensuree that these prices only
provide a baseline levell of support when the
farmer is in difficulty, without
ithout displacing ma
market
prices. Raising energy prices
ices to market levels will
also lead to lower inflation
ation over the med
medium
term, the horizon over which
hich the RBI is tryin
trying to
contain inflation. The reason
son is that higher pr
prices
will reduce excessive consumption, red
reduce
subsidies and fiscal deficits,
eficits, and incent
incentivise
investment and competition,
tion, even while allowing
allow
prices to be determined by an increasingly st
stable
and plentifully supplied global
lobal market for ene
energy.
26. IIP contracts 0.6%; retail inflation
ation eases to 2year low in Jan: Growth in industrial production
produc
remained negative for thee third month in a row,
contracting 0.6 per cent
nt in December 2
2013,
mainly due to the sluggish
gish performance of the
manufacturing sector. However,
owever, retail infla
inflation
for January 2014, eased to a two-year
year low of 8.79
per cent as against 9.87 per cent in the prev
previous
month.
27. Bitcoins are still under the lens:: RBI Gove
Governor
Raghuram Rajan has said
aid the central ban
bank is
currently trying to understand
rstand virtual curren
currencies
and will come out with a more considered vview
on it. In December, the RBI had cautioned u
users,
holders and traders of virtual currencies aabout
potential financial, operational,
perational, legal and
security-related risks they are exposing
expo
themselves to. The Government has
as said crea
creation,
trading or usage of virtual
irtual currencies as
a a
medium of payment are not authorised by any
central bank or monetary authority.

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28. Trade deficit halves

ves in Janu
January on fall in gold,
silver imports: Indias trade de
deficit fell by half to
$9.92 billion
n in January from $1
$18.87 billion in the
corresponding
ing month last year, with the
Governmentt succeeding in cutti
cutting down gold and
silver imports
rts through higher import
i
duties and
other curbs.
s. Total imports fell
fe 18.07 per cent
year-on-year
ar to $36.57 billion due to a 77 per
cent drop in gold and silver
silve imports, while
exports increased
creased a modest 3.79 per cent to
$26.75 billion
ion over the corresponding
correspo
month last
year. A low trade deficit is nec
necessary to contain
the current account deficit, and this in turn helps
to maintain a healthy balance of payments. A high
current account
count deficit, on the other hand,
weakens thee domestic currency and keeps away
foreign investors.
complain
against direct
29. Marked drop in complaints
selling and recovery
very agents:
agent According to the
annual report on the Bank Ombudsman
Om
scheme,
prepared by
y the Reserve Bank of
o India complaints
against direct
ect selling agents and
an recovery agents
declined to 351 at the end of 2012-13 against
1,722 at the end of 2010--11.
30. Maruti 800 production
uction stopped:
stop
The countrys
largest carmaker
rmaker Maruti Suzuki
Suz
has stopped
production of its nearly three
three-decade-old popular
car Maruti 800 with effect from January 18. The
small car was
as being sold in non-metros
non
in the last
two years. But with the stoppage
stoppag of production, it
will now no longer bee available to the public.
31. Sugar industry calls
alls for changes
cha
to bank loan
scheme: The
he Indian sugar indu
industry has urged the
Governmentt to ease or remove key conditions of
the proposed
ed bank loan scheme to clear the dues
to cane farmers. In December
Decembe last year, the
Cabinet Committee
ommittee on Economic
Econo
Affairs had
approved Rs. 6,600-crore
crore interest-free
intere
loan to the
sugar industry
stry and announced that the 12 per
cent interest
st subvention would be borne by the
Government.

32. Rs. 10 plastic note

e to be tried
trie out in five cities:
About 1billion
llion Rs. 10 plastic
plasti notes will be
introduced on a trial basis in five
fi cities Kochi,
Mysore, Jaipur,
ipur, Shimla and B
Bhubaneswar. The
field trial is expected to be launc
launched in the second
half of 2014.

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Infrastructure (PKI) in Payment System

Applications.
37. Committee
to
examine
FSLRC
Recommendations: RBI has constituted a
Committee headed by Shri G. Gopalakrishna,
Executive Director, Reserve Bank of India to
examine issues relating to Capacity Building in
Banking Sector as suggested by the Report of the
Financial Sector Legislative Reforms Commission
(FSLRC).
38. Report of the Technical Committee on Mobile
Banking: RBI has released the "Report of the
Technical Committee on Mobile Banking" which
was headed by Shri B. Sambamurthy, Director,
Institute for Development and Research in
Banking
Technology,
to
examine
the
options/alternatives including the feasibility of
using encrypted SMS based funds transfer using
an application that can run on any type of handset
for expansion of mobile banking in the country.
APRIL 2014
Important Data: FY14 fiscal deficit seen at 4.6% of
GDP; FY14 CAD likely to be $35 bn; FY14 Plan
Expenditure at Rs 4.75 lakh cr; FY14 exports projected
at $326 bn; Forex reserves crossed $300 bn
33. 4 more States identified for Aadhaar
enrolment: Aadhaar enrolment in four States
Uttar Pradesh, Bihar, Chhattisgarh and
Uttarakhand will be carried out in addition to
enrolment by the Registrar General of India (RGI).
As of now, over 57-crore Aadhaar numbers have
been generated, facilitating the roll-out of the
Direct Benefits Transfer (DBT) scheme in select
districts. At present, the DBT scheme covers 28
Centrally-sponsored schemes in 121 districts.
34. Justice Mathur to head 7th Central Pay panel:
The Government has approved the composition
of the Seventh Central Pay Commission. The
Commission will be headed by former Supreme
Court Judge Ashok Kumar Mathur. The
Commission has been mandated to submit its
report in two years time and its
recommendations would be implemented from
January 1, 2016.
35. RBI releases Report of the Committee on
Financial Benchmarks: The Committee was
headed by Shri P. Vijaya Bhaskar, Executive
Director, RBI to study various issues relating to
financial benchmarks in India.
36. Report on Enabling PKI in Payment System
Applications: RBI has released, the Report of the
Technical Committee on Enabling Public Key

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Re-promulgation of ordinance to boost Sebi

power: The Securities Laws (Amendment) Ordinance,
2014, that seeks to empower the Securities &
Exchange Board of India (Sebi) to effectively check
illegal deposit taking and Ponzi schemes has been repromulgated. The ordinance, gives the legal backing to
Sebi for powers to respond to the growing menace of
illegal deposit taking and Ponzi schemes. It also
empowers the Sebi board to recall and enhance a
penalty imposed by the adjudicating officer.
NRI remittances surge to $7.18 bn in 2013:
Remittances by non-resident Indians grew 6.44 per
cent between January and December 2013, as
compared with last year, which is the highest since
2008. States like Kerala, Maharashtra and Tamil Nadu
have contributed nearly 60 per cent to the total
inflows during the year. This is 10 per cent of the total
global remittance of $71 billion in 2013, estimated by
the World Bank. Kerala remains the top recipient,
contributing 33 per cent to the total remittances into
the country.
Regulator for Coal Sector: The government has put
in place a Regulator for Coal sector, through an
executive order. The coal regulator will advise the
government on principles and methodologies for price
determination, while state-owned Coal India Ltd (CIL)

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will continue to fix prices,

s, subject to the coal
ministrys approval. Theree are proposals for
regulatory bodies to govern the roads, biotechno
biotechnology
and real estate sectors as well.
Indirect tax collection at Rs 4.41 lakh cr in AprFeb: Indirect tax collections grew
rew by 5.6 per cent to
t Rs
4,41,826 crore in the April-February
February period of this
financial year. Excise collection
ion dropped by 3.8 per
cent to Rs 1,49,711 crore; Service
rvice tax collection
collection, grew
by 18.2 per cent; The government
nment has set a rev
revised
indirect tax collection target of Rs 5.19 lakh crore for
2013-14.
Limit raised for investment in inflation
ation bond
bonds: RBI
has decided to increase the
he maximum limit for
investment in Inflation Indexed National
tional Sa
Saving
Securities-Cumulative (IINSS-C)
C) to Rs 10 lakh per
annum from Rs 5 lakh earlier
er for eligible indivi
individual
investors and Rs 25 lakh perr annum from Rs 5 lakh
per annum earlier for institutions
itutions such as H
Hindu
undivided families, charitable
able trusts, education
e
endowments and similar institutions
titutions which are not
pro-profit in nature. Interestt rate on the bonds are
linked to Consumer Price Index (CPI).
Election Commission vetoes gas price hike
hike: The
Election Commission (EC) has
as refused to clear the
Union government's proposall for a steep increas
increase in
domestic gas prices. This will have a major bearing
bearin on
Reliance Industries Ltd (RIL),, besides Oil and Nat
Natural
Gas Corporation, Oil India Ltd
d (OIL) and Cairn In
India.
The poll panel decision puts on hold doubling of the
domestic natural gas price, from $4.2 per mi
million
British thermal units (mBtu)
u) to $8.4, till a new
government takes charge at the Centre.
Core sector grows only 1.6% in January:
anuary: The core
sector - fertilisers, cement, steel,
teel, electricity, crude oil,
coal, petroleum refinery products
ucts and natural gas has
roughly 28 per cent in the
he Index of Indus
Industrial
Production.

Unified transport ministry mooted: A high

high-powered
committee on transport development,
evelopment, headed by
former Reserve Bank of Indiaa (RBI) deputy gov
governor
Rakesh Mohan, has suggested
d a unified ministr
ministry of
transport with roads, railways
ays and ports as its
departments. It has also recommended
commended raising the

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road cess on petrol

etrol to Rs 4 a litre from the existing
cess of Rs 2 a litre.
New IIP to use value
e of some
som capital goods: To
ensure an accurate
rate picture of economic
econ
activity at a
point of time, a new Index of Industrial
Indu
Production
(IIP) would include
clude value of pro
production of some
capital goods in various phases of production,
p
instead
of their volumes at the finall stage. New IIP will have
over double of existing
xisting 800 items. It will have a 200910 as the base year against 2004-05
2004
in the present
series.
CVC seeks report on
n United Bank:
B
The Central
Vigilance Commission
ission (CVC) has sou
sought a report from
Finance Ministry on crisis- ridden United
Un
Bank of India
for under reporting
ting of its bad loans or
o Non Performing
Assets (NPAs). UBI's gross NPAs rose
ro 188.3% to Rs
8,546 crore at thee end of December 2013.
2
FinMin-backed ATM rollout plan
pla hits a wall: The
Union finance ministry-backed
backed plan for expansion in
public sector banks' Automated Teller Machines
(ATMs) by March
h 2014 is stuck in various
va
operational
and commercial problems. The plan
pla was for 63,000
ATMs to be installed
stalled in 16 geog
geographical regions,
33,000 during 2012-13
13 and 30,000
30,
in 2013-14.
Insurers not yet ready
y for Solvency-II:
Solv
Solvency-II
norms, which call for risk-based
based capital
cap
in insurance,
may take longerr than expected to b
be implemented in
India. Solvency-II
II is a European Union
Unio (EU) legislative
programme to be implemented
implemente in all 28 EU member
states. It introduces
duces a new, harmonised
harm
EU-wide
insurance regulatory
atory regime. Solvency-II
Solven
norms are to
insurers what Basel-III
III norms are for banks. These
norms are made up of provisions rel
related to the capital
requirements of companies,, regulatory
regulat
assessment of
a specific firms
s risk, and the regulators
re
broader
supervision of the
he entire market.
No error in printing of notes:
notes There were reports
that new Rs 1,000 and Rs 500
50 notes bearing
Subbaraos signature,
nature, who had d
demited office in
September 2013,
3, are being rolle
rolled out from the
printing pressess of RBI. RBI has said new notes
bearing a signature
ture of former governor
gove
D Subbarao
are legal tender and the process of cchanging signature
was underway. Changing the governors
govern
signature on
the banknotes is a tedious process. At
A present, notes in
India are issued in the denomination of Rs 5, Rs 10, Rs
20, Rs 50, Rs 100,
00, Rs 500 and Rs 1,000.
1
RBI receives
notes from four currency note printing
printin presses. Two of
the currency note
te printing presses are owned by the
Government of India and two are
ar owned by the
Reserve Bank, through its wholly owned
o
subsidiary,

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the Bharatiya Reserve Bank Note Mudran Ltd

(BRBNML). The government owned presses are at
Nasik and Dewas. The other two presses are at Mysore
and Salboni. Coins are minted in four mints owned by
the Government of India. The mints are located at
Mumbai, Hyderabad, Calcutta and Noida.
CAD falls to 0.9% of GDP in Q3; lowest in 4 years:
Indias current account deficit (CAD) for the quarter
ended December stood at $4.2 billion, or 0.9 per cent
of the gross domestic product (GDP), a sharp fall from
$31.9 billion (6.5 per cent) in the year-ago period. The
fall resulted from a pick-up in exports and moderation
in imports, especially of gold.

Transunion is the majority shareholder in CIBIL at

27.5 per cent. Among others, Bank of Baroda, Bank of
India, Punjab National Bank, Union Bank, Citicorp
Finance (India), HSBC, Standard Chartered Bank,
Indian Overseas Bank and HDFC Ltd each hold 5 per
cent stake in CIBIL. State Bank of India and ICICI Bank
carry 10 per cent each, while rest of 2.5 per cent is
with Sundaram Finance Ltd.
Demand for energy highest in India: The growth in
energy demand in India would be the highest among
all countries by 2030-35, beating even China, says the
2014 energy outlook report issued by British oil giant
BP. According to the report, Indias energy production
would rise by 112 per cent, while consumption would
grow by 132 per cent. Oil imports would rise by 169
per cent and account for over 60 per cent of the net
increase in imports, followed by increasing imports of
gas (+573 per cent) and coal (+85 per cent).
UP clocks maximum food grain production in
India: The food grain production in Uttar Pradesh
during 2012-13 crop year (July-June) has once again
topped its peers at about 50.84 million tonnes (MT).
Higher production has come about primarily due to
improving
productivity.
Against
food
grain
productivity of 2,448 kg/hectare in 2011-12, the
productivity index rose to 2,547 kg/hectare in 201213.
Industrial Production rises: Having declined for
three months in a row, industrial production
expanded by 0.1 per cent in January. However,
merchandise exports declined 3.67 per cent in
February, for the first time in eight months.
Manufacturing output declined for the fourth
consecutive month in January. This sector, which
occupies over 75 per cent weight in the Index of
Industrial Production (IIP), fell by 0.7 per cent
compared to a 1.2 per cent decline a month ago.
Within manufacturing, consumer durables and capital
goods persisted with a fall in output.

Govt approves 8.75% interest on EPF deposit for

2013-14: Interest rate was 8.5 per cent in 2012-13.
Muthoot to set up 9,000 white-label ATMs: The
Muthoot group company has partnered with FIS
Payment Solutions & Services India, which will act as
the technical partner for the project and Federal Bank
Ltd, is the sponsor bank for this venture.
Central Bank sells entire stake in CIBIL: Central
Bank of India has sold its entire stake in credit
information provider Cibil to Transunion International
Inc. Central Bank had a 5 per cent stake in CIBIL.

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Govt panel to review LPG subsidy pipeline: The

government has set up a committee to recommend
changes in a scheme to pay the cooking gas subsidy
into consumers' bank accounts. The 12-member panel,
headed by S G Dhande, former director of the Indian
Institute of Technology, Kanpur, will look at the
difficulties consumers faced in receiving the subsidy
after buying gas cylinders at market rates. The scheme
was launched last June and put on hold in January over
difficulties in implementing it.
Retail inflation declines to 25-month low in
February: Consumer Price Index (CPI)-based inflation

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fell to 8.1 per cent in February, the second-lowest

since the index was launched in 2012. Inflation for
food items, which account for about 45 per cent
weight of CPI, fell to 8.57 per cent from 9.9 per cent in
January.
Feb WPI at 9-month low: Wholesale inflation fell to a
nine-month low of 4.68 per cent in February from 5.05
per cent in the previous month, as prices of food items
rose at a lower pace. The inflation, based on the
Wholesale Price Index (WPI), declined to the Reserve
Bank of India (RBI)s comfort zone below five per
cent after eight months.

that monetary policy should move towards inflation

targeting. However, RBI is yet to take a final view. The
committee has said retail inflation should be the
anchor measure for the central bank, instead of
wholesale inflation. The aim is to bring CPI to eight per
cent in one year and six per cent at the end of two
years.
RBI's foreign exchange reserves near 27-month
high: The foreign exchange reserves rose by $1.84
billion to $ 297.29 billion for the week ending March
14. Foreign exchange reserves had hit a 39-month low
on September 6 when it touched $ 274 billion.

Forex reserves up $1.09 bn; back to April level:

Foreign exchange reserves rose $1.09 billion for the
week ended March 7 to $295.45 billion, back to the
level seen at the start of the current financial year.
India remains the biggest arms buyer: According to
Stockholm International Peace Research Institute
(SIPRI), India imported nearly three times as many
weapons as its nearest competitors China and
Pakistan over the last five years. The main supplier of
arms to India in 2009-13 was Russia, accounting for
75 per cent of all imports. The five largest arms
suppliers worldwide between 2009 and 2013 were
the US, Russia, Germany, China and France. The
worlds top five arms importers were now India,
China, Pakistan, the United Arab Emirates and Saudi
Arabia.
Private banks pip PSBs in Casa mobilization: In
2013, while the share of low-cost current account and
savings account (Casa) deposits improved in the case
of most private lenders, many government banks
reported a decline. While the Casa ratios of public
sector banks such as SBI, Bank of India, Canara Bank
and Union Bank of India declined compared to the
year-ago period, the ratio improved for private banks
such as ICICI Bank, Axis Bank, Kotak Mahindra Bank,
IndusInd Bank and YES Bank.
Attractive pricing, better customer service and
branding of Casa products have helped private banks
gain a good share of the low-cost deposit market.
Banks' deposit growth beats rise in credit: The
banking systems deposit growth continues to be
higher than the growth in credit, owing to slow
economic growth. Reserve Bank of India (RBI) data
show for the fortnight ended March 7, credit grew
14.65 per cent year-on-year, while deposits rose 15.55
per cent.
Reserve Bank has yet to decide on inflation
targeting: Urjit Patel committees has recommended

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New players opt out of national health insurance

scheme: The scheme was launched by the labour
ministry to provide health insurance to families living
below the poverty line. The Rashtriya Swasthya Bima
Yojana provides insurance to five members of a
familythe head of the household, spouse and three
dependentsup to Rs 30,000 for most diseases that
need hospitalisation. The government has set hospital
rates for a large number of treatments. Existing
ailments are covered from day one and there is no age
bar. Beneficiaries register with Rs 30 and the
government pays the policy premium to insurers
chosen through bids. The Centre pays 75 paise of

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every rupee of policy premium forr the Rasht

Rashtriya
Swasthya Bima Yojana and the states pay the rest.
Jammu & Kashmir and the northeastern states pay
only 10 per cent of the premium.
Public sector lenders write off more bad loans
than recovery: These banks wrote off Rs 19,505 ccrore
non-performing assets in the third quarter of 2013-14.
2013
The cash they recovered over
er the quarter was
wa Rs
18,933 crore. Another Rss 21,988 crore were
w
reclassified as not being bad any more, bringing d
down
the sticky loan portfolio of these
ese banks by Rs 60
60,426
crore. The state-owned banks had Rs 1,64,461 cro
crore of
non-performing assets on their
ir books on April 1, 2
2013,
which grew by Rs 1,24,147 crore
ore in nine months to
t Rs
2,28,181 crore on December 31, 2013.

Govt to borrow Rs. 3.68-lakh

lakh cr in April-Sept: The
Government willl borrow Rs. 3.68 lak
lakh crore during the
first six months (April-September)
September) of the next fiscal
year 2014-15 starting
tarting April 1. Borrowing programme
for the first half
lf is 61.5 per cent of gross market
borrowing as announced
nnounced in the interim
inte
budget. Total
borrowing was pegged at Rs. 5.97
5.9 lakh crore, Rs.
34,000 crore higher
gher than 2013-14
2013
fiscal ending March
31. However, net borrowing, which excludes
redemptions of government securities,
securitie will be Rs. 4.57
lakh crore, which
h is around 3 per ce
cent lower than the
current fiscal.
RBI extends deadline to implement
impleme Basel III norms
to 2019: The implementation of Basel III capital
regulations may necessitate some le
lead time for banks
to raise capitall within the internationally
intern
agreed
timeline for full implementation of the Basel III capital
regulations.
The
breather
will
w
align
full
implementation of Basel III in India
In
closer to the
internationally agreed
greed date of Januar
January 1, 2019.

e-filing services under MCA-21

21 tempo
temporarily
suspended from April 1-13: This move is intended
intende to
facilitate a smooth transition to the new forms u
under
the new company law. In this April 1-13
13 period, al
all the
new forms under the new company
mpany law are expected
expe
to be uploaded so that they
y could be used by the
business community under the new company law
regime. As many as 282 sections
ons in the new comp
company
lawwhich comprises 470 sectionswill
will come into
effect from April 1.
University of Chicago opens academic
demic centre
cent
in
Delhi: The centre will promote
ote scholarship through
thro
three broad programmes business,
usiness, economics, law,
and policy; science, energy,, medicine, and pu
public
health; and culture, society, religion, and arts. The
university already has centres in Beijing and Paris.
P
New company law: First set of finall rules is a m
mixed
bag for India Inc: Private companies
mpanies with an annual
an
turnover of Rs. 200 crore or an
n outstanding loan o
of Rs.
100 crore would now be required to appoin
appoint an
internal auditor. The final rules provide that unlisted
unli
public companies (with paid up capital of Rs. 10 ccrore
and above and those with loan
an of over Rs. 50 cr
crore)
need to have at least 2 independent
endent directors. This is
in variance to earlier proposal that one-third
third of the
boards of unlisted public companies
panies should comp
comprise
independent directors. Also,
so, now every li
listed
company and a public company
ny with a paid
paid-up capital
of Rs. 100 crore or a turnoverr of Rs. 300 crore sh
should
have a woman director.

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RBI
eases
forex
x
hedgi
hedging
rules
for
exporters/importers: Contracts booked
bo
up to 75 per
cent of the eligible
ible limit may be cancelled
c
with the
exporter/importer
ter bearing/being en
entitled to the loss
or gain as the case may be. The el
eligible limit in the

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case of exporters is computed

d as the average of the
previous three financial years
s (April to March) actual
export turnover or the previous
ious years actual ex
export
turnover, whichever is higher.. The eligible limit in the
case of importers is computed
ed as 25 per cent of the
average of the previous threee financial years actual
ac
import turnover or the previous years
ears actual im
import
turnover, whichever is higher.
MCX-SX appoints former LIC chieff Mr Math
Mathew as
chairman: Ashima Goyal, Professor
ofessor at Indira Ga
Gandhi
Institute of Development Research, has b
been
appointed as Vice-Chairperson.
Kotak Bank rolls out social networked
rked ac
account
Jifi: In an aggressive bid to go
o digital, Kotak Mahi
Mahindra
Bank has launched an onlinee social current acc
account
integrated with Facebook and Twitter. Targeted aat the
tech-savvy and the young, Kotak
tak Jifi is a no minimum
minim
balance, zero interest currentt account which can be
opened with an initial payment
nt of Rs. 5,000. The b
bank
has tied up with online retailers
etailers such as eeBay,
MakeMyTrip and Jabong, among
mong others, to at
attract
customers.
Banks denied access to wealth tax retur
returns of
defaulting borrowers: Though
gh the details of wealth
we
in the hands of defaulters (as stated in the wealth tax
returns) could be useful forr recovery of dues, the
income tax authorities do not
ot share the same with
banks even under the Right to Information Act.
IRDA allows collection of advance
e premium:
premium The
commission to the agents, however,
ever, could be paid only
after the adjustment of premium
um on due date.
Corruption, bribery, corporate frauds
uds biggest
bigges risk
factors for India Inc: As per India Risk Survey 2
2014,
carried out by FICCI and Pinkerton
kerton to assess the
impact of risks across industry
y and geographies within
w
the country, corruption, bribery,
ibery, corporate frauds
fr
biggest risk factors for India Inc.
nc. Strikes, closures, and
unrest have been rated as the second biggest risk
category.

departure (April
il 25) than the scheduled
sche
one (Juneend).
IRDA may ask life insurers to tie up with
repositories: The Insurance Regulatory and
Development Authority
uthority (IRDA) is likely to make it
mandatory for life
ife insurance compan
companies to tie up with
all five insurance
ce repositories by JJuly.The insurance
repository system
m lets policyholder
policyholders keep policies in
electronic form,, and make changes and revisions in
the policy. IRDA has licensed Karvy,
Karvy NSDL Database,
Central Insurance
ce Repository, SHCIL
SHC
Projects, and
CAMS Repository
y Services as repositories.
reposit
New secretarial audit rules likely
likel from April 1: The
Institute of Company
ompany Secretaries
Secretarie of India has
recommended that
hat the norms for proposed
pr
secretarial
audit should be on par with that of internal financial
audit. The Government
vernment needs to approve the
recommendation
n as a rule under the
t new company
law.
Private banks at higher
her risk of losing customers
than State-run lenders:
ers: According to a study
commissioned by IBM and con
conducted by the
International Data
ata Corporation (IDC),
(ID
private sector
banks are at a higher risk of losin
losing customers than
their public sector
ector counterparts, chiefly due to
unsatisfactory customer
ustomer services. Ab
About 41 per cent of
private bank customers
stomers transact wi
with more than one
bank, compared
d with 24 per cent at public sector
banks. The prime reasons
ons for customer
custom dissatisfaction
are unsatisfactory
ry branch experience (63.6 per cent of
respondents), problem
roblem resolution (5
(55.3 per cent) and
channel experience
nce (41 per cent).
Govt mulls new wayss to raise capital for banks:
These include investment by pension
pe
funds and
insurance companies,
panies, rights issue
issu for minority
shareholders att the time of capital
capita infusion by the
Government and
d issuance of shares to employees. It is
estimated that banks need around Rs. 1-lakh crore
capital in the next
xt few years to meet business needs.

Bank boards suffer from huge governance

vernance d
deficit:
According to RBI Deputy Governor
vernor KC Chakrab
Chakrabarty,
the Indian banking system needs a clean
clean-up of
governance, especially at the board level and sys
system
should be rule-based or principle-based
based but not
discretion-based, as is the case now.
Govt to sell stake in Axis Bank:: SUUTI, owned by
Govt currently holds 20.72 perr cent in Axis Bank.
KC Chakrabarty quits RBI: RBI
BI Deputy Governor,
Governor K C
Chakraborty has requested for a slightly ea
earlier

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JUNE JULY 2014

New Chief Justice of India:: Justice R.M.Lodha has
been appointed as new Chief Justice
ustice of India.
Deputy Governor of RBI:: R. Gandhi has b
been
appointed as Deputy Governor of RBI.
New FED Chief: Janet Yellen,
n, takes over from Ben
Bernanke as new Fed Reserve Chief..
been
Dadasaheb Falke Award 2013:: Poet Gulzar has b
selected for the Dadasaheb Phalke
alke Award 2013.
Arvind Mayaram is finance secretary: The
government has named Economic
nomic Affairs Secre
Secretary
Arvind Mayaram the finance secretary.
tary. Sumit Bose had
retired in March.
RBI appoints three new EDs: The Reserve Ban
Bank of
India (RBI) has appointed three new execu
executive
directors (EDs) namely N S Vishwanathan, Chan
Chandan
Sinha, and U S Paliwal. The central bank has nine
executive directors. Traditionally,
nally, among the four
deputy governors, two are promoted
romoted from within the
ranks of RBI while one is an economist and the fo
fourth
one is a commercial banker. Apart
part from R Gandhi who
has been recently appointed as Deputy Governor
Governor, the
other deputy governors are H R Khan and Urjit Patel.
Pat
Shri Gurdial Singh Sandhu nominated
inated on RBI
Central Board: The Central
tral Government has
nominated Shri Gurdial Singh
ngh Sandhu, Secre
Secretary,
Department of Financial Services,
ices, Ministry of Fina
Finance,
New Delhi as a director on the Central
tral Boar
Board of
Directors of the Reserve Bank of India.
Ila Patnaik appointed principal economic
conomic ad
advisor
in FinMin: Noted economistt Ila Patnaik has b
been
appointed principal economic
ic advisor in the Union
U
finance ministry. Patnaik, is currently
urrently Reserve Ban
Bank of
India chair professor at the National
ational Institute of Pu
Public
Finance and Policy (NIPFP),, a government fun
funded
think tank.
Issue of ` 5 coins to commemorate
e the occas
occasion of
"Acharya Tulsi Birth Centenary": The Government
Governm
of India has minted the above mentioned
ed coins w
which
the Reserve Bank of India will shortly put into
circulation.
India Ratings pegs FY15 growth at 5.6%: Fitch
group entity India Ratings on Monday kept its growth
gro
forecast for 2014-15 unchanged
anged at 5.6 per cent,
despite the India Meteorological Department (IMD)
(I
predicting a sub-normal monsoon
onsoon this year. The
official estimate for growth in 2013-14
14 is 4.9 per ccent,
against a decade-low of 4.5 perr cent in 2012-13.
2012

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D&B sees FY15 growth

wth at 5.5%
5.5%: India is likely to
clock a GDP growth
rowth of 5.5% during
du
the current
financial year provided
rovided there is normal
nor
monsoon and
stable government
ent at the centre, says a D&B report.
Mutual funds make AUM disclosures:
disc
All fund
houses have begun
gun disclosing inve
investments of group
companies in their
eir assets under management
man
(AUMs).
Birla Sun Life MF
F tops the list with Rs 6,585 crore from
its related entities.
No entry age limit forr govt staff
sta under NPS: The
pension sectorr regulator has said
s
all eligible
government employees
ployees (central & state)
st
on the rolls of
the government can be enrolled
rolled into the National
Pension System (NPS), irrespective of age at the time
of entry. However,
er, this is subject to the condition that
the total period of contribution to NPS account shall
not be more than
an 42 years. NPS is the contributory
pension scheme launched by the Union
Uni government in
January 2004. It was made compu
compulsory for all new
government employees.
IndusInd Bank to foray
ay into asset
ass reconstruction:
IndusInd Bank plans to start ass
asset reconstruction
business in the next couple of months.
mon
The privatesector lender has already firmed up its business
strategy and plans
lans to partner ass
asset reconstruction
companies (ARCs)
Cs) for this new business
b
venture.
While the Reserve
ve Bank of India has barred ARCs from
acquiring bad loans
ans from sponsor ba
banks on a bilateral
basis, it has allowed
owed such transactio
transactions if the asset is
auctioned in a transparent
ransparent manner, o
on an arm's-length
basis and if prices
es are determined by market factors.

ICAI to issue norms on fraud reporting

rep
by auditors:
Accounting watchdog
tchdog the Institute
Institu
of Chartered
Accountants of India (ICAI) will bring
bri out a guidance
note for auditors
rs on detecting corporate
corp
fraud. This
follows the new Companies Act making
mak
it mandatory
for auditors to
o report corporate frauds to the
government within
hin a specified time frame. Under the
new Act, if the statutory
tatutory auditor has sufficient reasons
to believe an offence
ffence involving fraud
frau is being or has
been committed in a company, it has to be reported to
the governmentt within 60 days of coming to know
about it.

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Sebi revises norms for liquidity

ty enhance
enhancement
schemes: Capital markets regulator
egulator Securities and
Exchange Board of India (Sebi)
ebi) has revised norms
no
governing the incentive schemes
es that stock exchanges
excha
can provide members for
or trading on ttheir
platforms.The new norms allow
ow exchanges tto provide
incentives for a maximum of three years.
RBI group wants use of public key
y infrastru
infrastructure
for safe payment system: As consumer ban
banking
frauds are on the rise, a Reserve
erve Bank of India (RBI)
(
group has suggested the use of public key
infrastructure (PKI) in orderr to ensure a safe and
secure payment system in the
he country. The cen
central
bank has launched a series of initiatives to imp
improve
technological infrastructure to support payment and
settlement systems (RTGS) which are terme
termed as
PKI such as real time gross
oss settlement, nati
national
electronic fund transfer (NEFT), etc. Acknowledging
Acknowled
that non-PKI payment systemss such as magnetic ink
character recognition (MICR) or non-MICR
MICR clearing,
clea
electronic credit system, credit
redit and debit ccards
contributed 75 per cent in volume
lume terms but only 6.3
per cent in value terms in 2012-13
13 in ban
banking
transactions, the group has called for using PK
PKI to
provide a safe, secure payment
ent system and en
ensure
legal compliance. According to the report, banks,
bank in
their
internet
banking
applications,
sh
should
mandatorily create an authentication
tication environmen
environment for
password-based, two-factor authentication
uthentication as we
well as
a PKI-based system. Besides,, banks should provi
provide a
PKI-based authentication system
stem for online ban
banking
transactions as an optional feature
ature for customers.
RBI puts curb on using ECB to repay dom
domestic
loans: The Reserve Bank of India (RBI) has barred
ba
companies from repaying domestic loans through
thro
funds raised through externall commercial borrow
borrowings
(ECBs) from foreign branches of Indian
an banks. RBI told
banks to put restrictions on their foreign branche
branches in
terms of giving guarantees
es to offshore joint
ventures/subsidiaries of Indian
an companies to ava
avail of
foreign currency loans to repay
y rupee credit.
Indo-US trade to cross $100 billion: Accordin
According to
James Golsen, principal commercial
mercial officer - south
India, US Commercial Service;
ice; trade between the
United States and India is soon
n expected to cross $ 100
billion,
The total goods trade between
en the countries in 2
2013
stood at $ 63.7 billion.
Intervention difficult when currency
cy falls sh
sharply:
According to RBI Deputy Governor H R K
Khan,
intervention in the face of thee sharp depreciation is a

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difficult choice for several reasons, including loss of

reserves, particularly
ularly in a country like
lik India where the
external liabilities
ies far exceed the official reserves.
Between Aprill and August, 2013,
2
the rupee
depreciated about
out 19 per cent against
a
the dollar
following fears of the US Fed's tap
tapering programme
and also, weak
k domestic fundam
fundamentals like high
current account deficit aggravated th
the problem.
RBI ED seeks voluntary
ry retirement:
retireme Reserve Bank of
India (RBI) Executive
cutive Director G Gopalakrishna
G
has
voluntarily retired
red from the service
servi and joined as
director of Centre
tre for Advanced Financial
F
Research
and Learning (Cafral). Cafral, a not-for-profit
organisation, is an independent body
bod fully funded by
RBI.

Mor panel's financial inclusion report may be put

on back burner: The Union finance ministry and the
Reserve Bank off India (RBI) have raised
ra
questions on
viability and implementation
plementation of the recommendations
made in the Nachiket
achiket Mor committee's
commit
report. The
panel had, among
ong other things, suggested a new
banking structure
re to foster financial inclusion. There is
unease with the
he idea of non-banking
non
companies
getting the status
us of banks, without
withou obligations like
adhering to the cash reserve ratio and the statutory
liquidity ratio. The Mor committee
committe had suggested
setting up two types of banks - payment banks and
wholesale banks - besides talking
talk
about some
convergence in regulations for banks and non-banking
financial companies
anies (NBFCs). The committee's
suggestion that existing commercial banks be allowed
to hold paymentt banks as subsidiaries
subsidiar
is also seen as
unviable as this
is might not serve the purpose of
financial inclusion,
on, as NBFCs charge very high interest
rates and mightt continue to do so even after being
converted into banks.
CAG can audit private
rivate companies: T
The Supreme Court
has held that the
he Comptroller and Auditor General
(CAG) could audit
udit the account books
b
of private
telecom companies,
nies, which share th
their revenues with
the governmentt for using spectrum
spectrum. The Court said
such a scrutiny
ny was crucial fo
for ensuring the
government gott its legitimate sh
share for allowing
private telecom operators to use the
th valuable natural
resource. Though
h the Supreme Cou
Courts present order
is for the telecom
m sector, it may ha
have an implication

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for other industries like power,

wer, mining, roadways,
roadw
ports and airports, in which private companies ei
either
share revenues with the government
vernment or partner
part
it
under the public-private partnership
ership (PPP) model.

has been proposed

sed that for an evasion
eva
up to Rs 10
lakh, the fine can be increased to Rs 50,000 or 20 per
cent of the duty
ty evaded, whicheve
whichever is more. If the
evaded amountt is more than Rs
R 10 lakh, the
punishment willl involve imprisonment
imprisonme of up to a year
or a fine of at least
st Rs 50,000 or both.
both
RBI push for Interest
est Rate Futures to boost
trading: RBI may
ay introduce more tenures
t
in Interest
Rate Futures (IRF)
F) to drive trading v
volumes further. In
December, the regulator made a third attempt to
launch IRFs. The previous two attempts
attem
had witnessed
a lukewarm response.
sponse. RBI's definition
defini
of IRF is, "a
standardised interest
terest rate derivativ
derivative contract, traded
on a recognised
d stock exchange to buy or sell a
notional security
ity or any other interest-bearing
instrument or an
n index of such instruments
instru
or interest
rates at a specified
fied future date, at a price determined
at the time off the contract. Cu
Currently IRFs are
permitted wheree the underlying product
pr
is a 91-day
treasury bill, a two-year,
year, five-year
five
or 10-year coupon
bearing government
ent security.

Stamp Act revamp to benefit treasury: The

proposed Bill to amend the Indian
ndian Stamp Act of 1899
1
has sought to increase the maximum
aximum penalty to Rs 1
lakh for various offences, compared with a few
hundred rupees at present. According to the d
draft,
circulated by the Union finance
ce ministry for comment,
comm
if a share warrant is issued
ed without being duly
stamped, the penalty on thosee executing or signing
signi it
will increase from Rs 500 at present to Rs 1 lak
lakh. In
the case of any other instrument
ent chargeable with d
duty,
such as debentures or preferential
ntial shares, the fine will
be Rs 10,000. Once the Bill
ill was enacted, st
stamp
revenue would double to about
ut Rs 60,000 crore a yyear,
as penalties for various offences
nces under the
th Act are
proposed to be increased substantially.
bstantially. In the d
draft
Bill, a provision has also been
n made to levy a pen
penalty
of up to Rs 1 lakh for failure to provide the requ
required
cooperation in inspection of private and governm
government
premises and providing the required
ired information and
records (paper as well as electronic).
tronic). The fine has also
been increased substantially for stamp duty eva
evasion.
Currently, the maximum penalty
lty for this is Rs 5,00
5,000. It

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State Bank of India to review branch policy in

metros: The State
ate Bank of India gr
group is embarking
on a fresh strategy
rategy for expansion
expansio - opening of
branches and automated
utomated teller machines
mac
(ATMs) and
relocating branches - in the four me
metropolitan regions
of Delhi, Mumbai,
ai, Chennai and Bangalore.
Bang
It wishes to
cut the time for break-even
even to a year for new branches
from the present
nt period of up to 24 months. Apart
from the imperatives
atives of competition,
competitio it is looking at
effective use off locations and bett
better deployment of
resources in metropolitan
tropolitan regions.
March inflation data
ta dash rate cut hopes:
Wholesale Price Index (WPI)-based
(WPI)
inflation rose to a
three-month high
gh of 5.7 per cent in March, from a
nine-month low of 4.68 per cent in February. This
increase was mainly duee to supply-side
supply
constraints,
primarily in certain foods. Retail
Ret
inflation, as
measured by the Consumer Pr
Price Index (CPI),
increased to 8.31
1 per cent in March against 8.03 per
cent in February,
y, led by a sharp rise
ris in the prices of
vegetables and fruit. The increase iin rural areas was
8.89 per cent and in urban areas,
area 7.51 per cent,
showed the official data.

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Now, life insurers can file only 5 products a yr: The

Insurance Regulatory Development Authority (Irda)
has come out with a new product planner rule by
which an insurance company can file only five
products for approval a year. But, this has not gone
down well with the companies. Irda has said if the
number of products exceeded five, the insurer should
furnish supporting market research, product-wise
persistency for the 13th month, 25th month and 37th
month as on April 30 of the previous year. At present,
Irda follows the file-and-use method of application,
wherein insurers apply to obtain prior approval of the
authority to introduce/modify insurance products.
Beginning April 2014, insurers have been advised to
file this planner, at least 45 days before the beginning
of the next financial year, that is, before February 15 of
each year.
Jalan bats for better govt-central bank ties and
flexible policy-making: Former RBI governor Bimal
Jalan has said that the priority of a central bank should
not be fixated on either growth or inflation. Central
banks need to consider national priorities in their
policy decisions. The Urjit Patel committee advised
explicit focus on an inflation target, with the retail
price inflation figure seen as appropriate in this
regard.
Corporate Governance Norms: Capital market
regulator, SEBI, has issued corporate governance
norms for listed companies. The new rules will be
effective from 1st October 2014. Highlights include
(a) The listed companies need to provide the option of
facility of e voting to shareholders on all resolutions
proposed to be passed at general meetings; (b) To get
shareholders approvals for related party transactions;
(c) Establish whistle blower mechanism; (d) Elaborate
disclosures on pay packages; (e) At least a woman
director on their boards; (f) Maximum tenure of an
independent director to two terms of five years and if
a person has already served as an independent
director for five years or more in a listed company till
the date new norms come into effect, he would be
eligible for appointment for one more term of five
years only.
Final Standards to curb Exposures of Banks to
customers: The Basel Committee on Banking
Supervision issued Final standards for measuring and
controlling large exposures of banks to customers.
These standards will take effect from 1 January 2019.
Main objective of the rules is to minimize the risk of
fallout from a counterparty going default without
imposing excessive burdens on financial firms and to
ensure that the maximum possible loss a bank could
incur if such a default were to occur would not

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endanger the bank's survival as a going concern. In

cases where the bank's counterparty is another bank,
large exposure limits will directly contribute towards
the reduction of system-wide contagion risk. The
supervisors can impose a 25% cap on exposures. A
tighter limit will apply to exposures between banks
that have been designated as global systemically
important banks (GSIBs). This limit has been set at
15% of Tier 1 capital.
India down in leveraging ICT for growth: A World
Economic Forum report states that India has slipped
down to 83rd spot among 148 economies in terms of
leveraging
information
and
communications
technologies for growth and well being. In 2013, it
ranked 68th out of 144 countries. Among emerging
market economies, China was placed on the 62nd
position, Brazil (69th), Mexico (79th) and India (83rd).

JULY 2014
XLRI receives recognition as top educational
institution: XLRI, was felicitated in London at the
first-ever SkillTree Great Place to Study India
Edition. The other institutions felicitated include
Great Lakes Institute of Management, IMT-CDL,
Ghaziabad, ICFAI University, Manipal University, AIMS
Institutes, Apeejay Education Society and Apeejay Stya
University, among others.
SBI launches digital touch banking branches: State
Bank of India has launched six digital branches in
Mumbai, Bangalore,Chennai and Ahmedabad, besides
Delhi. Named as sbiINTOUCH, these branches will
have digital banking capabilities, which include instant
account opening with personalised debit cards, instant
loan approvals for education, car and home and
remote expert advisors available via video links. The
bank has engaged Accenture to develop the digital
business strategy for its programme.
Manufacturing output registers strongest growth
since Feb: The HSBC Purchasing Manager Index (PMI)
rose to 51.5 in June from 51.4. Though the increase is
marginal the important thing is that the
manufacturing output has increased for the eighth
successive month.
Fiscal deficit hits 45% of full-year target in 2
months: The countrys fiscal deficit in the first two
months of the current fiscal (2014-15) touched 45.6
per cent of the Budget Estimate for the whole year; it
was 33.3 per cent in the same period last year.

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5-7 lakh banking jobs in the offing: With close tto 50

per cent of the workforce in public
ublic sector banks set
s to
retire in the next few years, the
he banking industry will
soon be among the top employers
oyers offering five-seven
five
lakh jobs.

9th Financial Stability

tability Report, the
th RBI said low
domestic growth
h and high inflation continue to have
an adverse effectt on the savings-investment
savings
dynamics.
Households financial
ancial savings as a percentage of the
GDP declined from
om about 12% in 2007-08
200
to about 7%
in 2013-14. Expenditure
enditure on valuabl
valuables has risen from
about 7% to about 10%.

Ministry clears the air on status

s
of private
companies: The
he Corporate Affai
Affairs Ministry has
clarified that private
ivate companies tha
that are subsidiaries
of foreign parents
ents will not be ttreated as public
company for thee purpose of compliance
complia
with the new
company law.

External debt rises to $440.6 billion: Indias

external debt as of March 31, 2014, showed an
increase of $31.2 billion over
ver the year to $4
$440.6
billion. The increase in total
al external debt du
during
2013-14 was primarily on account
count of the rise in nonresident deposits. In terms off major components
components, the
share of external commercial borrowings continue
continued to
be the highest at 33.3 per cent
nt of total external debt,
d
followed by NRI deposits (23.6
3.6 per cent) and sshort
term debt (20.3 per cent).
Treat gold deposits as part of CRR/SLR
RR/SLR: Bankers
want the Reserve Bank of India
ia to include a portio
portion of
their gold deposits to meet thee statutory pre
pre-emption
requirements relating to either
her Cash Reserve R
Ratio
(CRR) or Statutory Liquidityy Ratio (SLR), bot
both of
which banks consider as non-productive.
High inflation remains a threat for economy
economy: As per
RBI, high inflation and the consequent
nsequent low real ra
rate of
return on financial assets may
ay force savers to take
excessive risks in their search for better returns. In
I its

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SEBI raises the bar on

n related party
p
transactions:
New company law (enacted in 2013)
2
and SEBIs
revised corporate
te governance framework
fram
to become
effective from October
ctober 1, have clearly raised the bar on
RPTs but it would
ld enhance the transparency
tran
quotient
of such transactions.
tions. The new regi
regime requires both
board and shareholders
holders approval in certain situations
to conform to thee new law. The big d
difference between
now and the erstwhile
stwhile regime (com
(company law enacted
in 1956) is that the Government will now have no role
to play in the approval process for related party
transactions. Under the new regime, RPTs will have to
be approved by an audit committee (if a company is
required to have
ve such committee),
committee the board of
directors and also
so shareholders.
Arrangement between
n banks, asset
as
reconstruction
firms needs a relook: A spurt in the activities of asset
reconstruction companies (ARCs) driven by banks
efforts to clean up their balance ssheets calls for a
closer look at thee extant arrangements
arrangeme
between ARCs
and banks. In 2013-14
14 (FY14), banks sold nonperforming assets
sets (NPAs) aggreg
aggregating about Rs.
18,000 crore ( around Rs. 10,000 crore in FY13) to
ARCs. As most of the securitisation activity is taking
place predominantly
antly with the issu
issuance of security
receipts (SRs) rather
ather than cash, there
ther is a concern that
banks may tend to use this option tto evergreen their
balance sheets.
NBFCs outside regulatory
tory ambit may pose risk to
financial system: A Shadow Banking
Bankin Implementation
Group carried out a preliminary study of such

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institutions and recommended

ed that they be brought
bro
under some regulation. It found that there
here was a high
degree of heterogeneity in business
usiness models and risk
profiles across various non-banking nancial ent
entities
in the organised as well as thee unorganised (informal)
(infor
sectors. It also identified exempted
mpted provident fu
funds,
unregulated chit funds, co-operative
operative and cr
credit
societies and primary agricultural
ltural credit societie
societies as
groups of institutions that need
eed a greater degre
degree of
oversight. The current regulations
ulations focus only on
deposit-taking NBFCs and
d large systemi
systemically
important non-deposit taking NBFCs.
BFCs. Those NB
NBFCs,
which are below the asset size threshold of Rs
Rs. 50
crore, are not under the surveillance
illance of the RBI.
Govt imposes $450/tonne MEP on potato
potato: The
Government has imposed a minimum
inimum export pric
price of
$450/tonne on potatoes to prevent shortage in the
domestic market and tame rising
ising prices. This follows
fol
similar restrictions imposed on onion exports last
week. The DGFT had fixed an MEP of $300 on onio
onions.
Delhi University rolls back FYUP: In line with the
directive of the UGC, the University of De
Delhi has
decided to roll back the Four
ur Year Undergraduate
Undergrad
Programme.
SBI business per employee surgess on large-scale
large
hiring: The State Bank off Indias business per
employee has seen a 51 per cent
ent jump in the last four
years on the back of large-scale recruitment.
itment. Staff
productivity or business per employee
mployee increased tto Rs.
10.64 crore as at March-end
d 2014 against Rs. 7.04
crore as at March-end 2011. The large
large-scale
recruitment of Generation Next employees in the
Officers and Assistant grade over
ver the last th
three to four
years has brought about a far-reaching
reaching attitud
attitudinal
change among staff in their customer interface and
services across the branches.
Govt hikes import duty on sugar: The Government
Governm
has hiked the import duty on sugar to 40 per cent ffrom
15 per cent to curb inflow of cheaper sweete
sweetener.
Government also decided to provide additi
additional
interest-free loans of about Rs.. 4,400 crore to the ccashstarved sugar mills to clear cane payment arrears
arr
estimated at around Rs. 11,000
00 crore. The subsid
subsidy on
raw sugar exports would be extended till Septem
September
2014. Also 10 per cent mandatory
atory blending of eth
ethanol
(a by-product of sugar) with petrol would be allo
allowed
against 5 per cent at present.
ent. However, all tthese
decisions were subject to the sugar indus
industry's
guarantee that it would clear all arrears.

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Govt sets 2-week deadline

eadline for inter-Ministerial
consultations on Cabinet
net propos
proposals: In all the cases
where the notess for the Cabinet/Cabinet
Cabinet/Ca
Committees
are required to be circulated for inter- ministerial
consultations, the
he entire process will
wil be completed in
two weeks time.

FIU wants banks to sniff out more suspicious

transactions: Frequent
requent operation of locker facility
and making loan re-payments
payments in ccash will soon be
reported by banks
ks to the financial intelligence
in
agency.
This is to keep a tab on suspicious transactions. IBA
has advised banks
ks to incorporate m
more parameters in
their transaction
n monitoring system so that the FIU
gets alerts on suspicious
spicious transactions.
transactions
Youngsters may get an earnin
earning opportunity as
ATM keepers: Andhra Bank plans
pl
to rope in
individuals and business persons for cost-effective and
efficient management
gement of its ATMs.
AT
Unemployed
graduates and other
ther willing individuals
individu
will be asked
to keep a watch
h on ATMs as a substitute
sub
to private
security personnel
nel who now man these
the counters.
RBI sets timelines forr regulatory
regulato approvals: RBI
has announced timelines for regulatory
regulat
approvals and
Citizens Charterr for delivery of services.
ser
Among the
approvals that the
he RBI will grant in 9
90 days include inprinciple approval
oval for a private
privat bank licence,
appointment/re-appointment
appointment of who
whole-time directors,
and part-time chairmen in private
priva
sector banks.
Among the approvals
rovals that the centr
central bank will grant
in 60 days include
de remuneration, bonus
bo
and Employee
Stock Option Plan of whole--time directors, part-time
chairmen of private
vate sector banks an
and CEOs of foreign
banks operating in India. Approval
Approva to non-banking
finance companies
nies for the issue of Certificate of
Registration (other
other than Securitisation
Sec
and
Reconstruction Companies) will be issued
is
in 45 days.
Ahead of Budget, rail fare hiked 14%, freight 6.5%:
From June 25, rail
ail travel will become
becom costlier by 14.2
per cent and moving
oving goods by about
ab
6.5 per cent.
Every day, the Railways
ailways ferries over 20 million people
and hauls over 2.8
.8 million tonnes of ccargo such as coal,
cement, fertiliserr and petroleum products.
pro

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New shareholding norm: Govt in a bind on diluting

di
stake worth Rs. 61,000 cr: About
bout 35 PSUs (25 CP
CPSEs,
nine public sector banks and one State-level
level pu
public
enterprise) would need to dilute
lute stake worth around
aro
Rs. 61,282 crore. SEBI has said
d all listed PSUs will h
have
to maintain 25 per cent minimum
um public sharehol
shareholding
as against 10 per cent currently.
Mid-sized banks may struggle to mobilise retail
deposits: Mid-sized banks will
ill now be making a rush
to mobilise more retail deposits
its and increase liqu
liquidity
to meet the liquidity coverage ratio (LCR) requirem
requirement
prescribed by RBI. The main
n objective of LCR is
i to
promote short-term resiliencee of a banks liquidity risk
profile by ensuring that it has
as sufficient high-quality
high
liquid assets to survive a significant
gnificant stress scen
scenario
lasting 30 days.
PSU banks lag peers in code implement
implementation:
According to the Banking Codes
des and Standards
Stand
Board
of India, the overall score of public sector banks was
lower at 69.6 against that of all
ll banks at 74.2 per cent.
The overall score of private sector banks (78.2) and
foreign banks (88.6) was above the all ba
banks
average.The overall scoring was based
ased on five
parameters

information
ation
dissemination,
dissemina
transparency, customer centricity,
icity, grievance redre
redressal
and customer feedback.
Insurance firms eye telecom operators
perators to sell
products: Insurers have written
ten to the Departme
Department of
Financial Services to allow them to approach the
Telecom Regulatory Authority
y of India. This will help
in using the wide distribution
ion network of tele
telecom
companies to sell basic insurance
rance products, suc
such as
health and personal accident covers. If the distribu
distribution
of insurance products is allowed
llowed through tele
telecom
operators, then they can sell the products and
facilitate premium payments through mobile phones.
phon

Puducherry tops on elementary

ary educ
education:
Puducherry with an EDI scoree of 0.762 has topped
toppe in
the Educational Development Index
ex (EDI) for 2013-14,
2013
while Uttar Pradesh fared
ed worst at 0.
0.462.
Lakshadweep, Sikkim, Himachal
machal Pradesh and
Karnataka were second, third,
hird, fourth and fifth
respectively. The index is a measurement of the
countrys progress in terms of elementary educa
education.

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EDI is calculated
ted using a set of 24 indicators
regrouped into
to four sub-groups
sub
access,
infrastructure, teachers
eachers and outcomes.
outcome
Power sector: A risky
ky asset for
f
Indian banks:
According to Moodys
oodys Investor Serv
Service, power sector
will continue to be a source of
o asset quality risk for
public and private
te sector banks in India
In
if the financial
condition of State electricity board
bo
distribution
companies (discoms)
scoms) do not improve
i
through
structural reforms.
Crackdown on hoarders
ers tops measures
m
to tame
inflation: With the prices of essential
esse
food items
shooting up, Finance Minister Arun
A
Jaitley has
announced a series
ries of measures, incl
including free trading
of fruits and vegetables
getables and releasing
releasin rice in the open
market, to tame inflation. The Centr
Centre has also advised
States to crack down on hoarders.
hoarder There are 22
commodities under active observation
obse
of the
Government.
Sops for electronics production
roduction in 8 cities: In a bid
to boost electronics
nics manufacturing,
manufacturing Communications
and Information
n Technology Minister
Minis
Ravi Shankar
Prasad said incentives
entives would be gi
given to companies
that set up greenfield
nfield factories in eight
e
cities namely
Ghaziabad, Vadodara,
dodara, Gandhinagar,
Gandhinag
Ahmedabad,
Nagpur, Nashik,, Aurangabad and Thane.
Th
The scheme,
called Modified Special Incentive Su
Subsidy Scheme (MSIPS), was launched
ched by the UPA Gov
Government in 2012.
It provides refunds
efunds for investments
investm
in capital
expenditure 20 per cent in SEZs and
a 25 per cent in
non-SEZs. It also
lso provides for rreimbursement of
countervailing duty/excise for cap
capital equipment in
the non-SEZ units.
its. Prasad also announced
anno
the setting
up of greenfield electronic manufac
manufacturing clusters in
Bhopal, Bhubaneshwar,
neshwar, Hyderabad,
Hyderabad Maheshwaram,
Bhiwadi, Jabalpur,
lpur, Hosur and Kakkanad. The
Electronic Manufacturing
facturing Cluster Scheme,
Sch
also notified
in 2012, offers financial
inancial assistance through
th
aid grants.
For greenfield clusters,
lusters, the assistance
assistanc is 50 per cent of
the project cost,, subject to a ceiling of Rs. 50 crore for
every 100 acres of land.
Dont blame us for emissions: Ahead of the UN
Climate Summitt 2014 to be held in New York in
September, Environment
ironment Minister Prakash
P
Javadekar
said, dont blamee us for carbon emissions.
emi
While the
country definitely
ly needs to reduce its
it emissions, India
and other developing
loping countries also have a right to
grow which can entail some rise in
i emissions. Last
year, the Indian delegation, along with
wi more than 100
developing countries,
ntries, had walked o
out of the United
Nations Climatee Change Conference
Conferenc (UNCCC) 2013

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held in Warsaw over the refusal

efusal of the developed
develo
countries to agree to a mechanism
anism for compensa
compensation
for climate change-induced disasters,
isasters, which affect
affec the
developing and least developing
ng countries most.
RBI not in favour of two structuress for regulations:
regula
According to RBI Governor,
nor, Raghuram R
Rajan,
regulators must be given the flexibility
lexibility and freedo
freedom to
regulate as too much of checks
cks and balances could
c
completely vitiate the flexibility
xibility afforded. The
Financial Sector Legislativee Reforms Comm
Committee
(FSLRC) report has suggested
d that almost everything
everyt
the regulator does should be subject
ject to legal appe
appeal. It
has suggested the creation of a Financial Sector
Se
Appellate Tribunal.
Common service centres to begin
gin sellin
selling life
insurance: CSC e-Governance
ce Services India Lt
Ltd, a
special purpose vehicle floated
d by the Governmen
Government to
operate common service centres,
res, will begin selling life
insurance in about a months time. The organisa
organisation,
which operates 130,000 common
mon service centre
centres to
provide a host of services in
n rural areas across the
country, has tied up with 14 insurers and is wor
working
on teaming up with the others.
Instant transfer funds from US to Indian bank:
Punjab National Bank (PNB) and Nasdaq-listed
listed X
Xoom
Corporation have partnered to roll out instant bank
b
deposit services to bank accounts
unts in India. The ins
instant
money transfer will be done by using the Immediate
Immed
Payment Services (IMPS), a unique remitt
remittance
processing platform offered by the National Paym
Payment
Corporation of India. Through this tie-up,
up, money can
be transferred instantly by a Xoom
oom user from the U
US to
not only bank accounts held in Punjab National B
Bank
but to any bank account in India.
dia. At present, IMPS has
63 banks (in India) as part of its ecosystem.
State Bank to ramp up POS terminal
nal networ
network: SBI
will ramp up its point-of-sale (POS) terminal network
netw
by 1.20 lakh each year over the
he next two years. B
Banks
install POS terminals at merchant
hant outlets to facil
facilitate
acceptance of payments from customers by swi
swiping
their debit/credit/pre-paid cards on the termi
terminals.
Towards April-end, ICICI Bank had the largest
lar
network of POS terminals (2,90,898),
90,898), followed by Axis
Bank (2,47,392), HDFC Bank
nk (2,12,748) and SBI
(1,40,628). Already, SBI has the largest networ
network of
ATMs (44,062 of April-end) in the country. With the
ATM network of SBIs fivee Associate Banks put
together, the State Bank Group
p has 51,753 ATMs.

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Foreign creditors may

y recall loans
loa to PSBs if Govt
stake falls below 51%:: If the governments
gove
stake in
public sector banks
anks drops below 51 per cent then
foreign creditors
rs of these banks may either renegotiate the loans
ans or call them back.
back
Inflation at 5-month high on rising
r
food prices:
Wholesale price index (WPI)--based inflation touched a
five-month high of 6.01 per cent in May, driven by a
spike in food, fuel
uel and manufactured
manufacture product prices.
This was higherr than the 4.58 per cent recorded in
same month lastt year and the 5.2 per
p cent logged in
April.
India is poorest in South
th Asia after Afghanistan:
According to an Oxford varsity study,
study India is home to
over 340 million
n destitute people aand is the second
poorest country
y in South Asia after strife-torn
Afghanistan. Forty
rty per cent of all po
poor in 49 countries
live in India, mostly
tly in rural areas.
RBI guidelines on liquidity standards credit
positive for banks:: According to Moodys, RBIs
guidelines on liquidity
iquidity standards aare credit positive
for Indian banks.
ks. The LCR is des
designed to address
short-term liquidity
idity risk by ensuring
ensurin that banks hold
sufficient cash and other liquid assets to meet
obligations in a 30-day
day market stress scenario.
Power Ministry wants State
Stat
regulators to
periodically revise tariffs: The Power
Pow Ministry wants
State regulators to regularly revise electricity
e
tariff so
that there are no financial outage
outages for generation
companies or distribution utilities.
utilitie This will also
protect consumers
ers from sudden, steep
st
hikes in their
electricity bills. The Central Electricity
Elect
Regulatory
Commission (CERC)
ERC) undertakes a tariff revision
annually while the tariff determination
determinat
principles are
revised every five years.
Sardar Sarovar: Gujarats
ats battle on height won, but
war on canals ahead: Gujarat Government
Gove
have won
the eight-year-long
ong battle to install 30 sluice gates at
Sardar Sarovar dam on the river Narmada,
N
thereby
increasing its height by 17 metr
metres to 138.68 m.
However, so far,, the State Government
Governme had completed
construction of only 22,284 km of canal
c
network, out
of a total of 72,624
624 km planned. Thi
This means, now, the

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Government will have to rush through the

construction of nearly 52,340-km-long canal network
so that benefits of Narmada waters could reach across
Gujarat.
Cost inflation index raised by 9.05%: Last year, the
index was 939, and this year it is 1024. The index is
useful for income-tax assessees in the computation of
tax on long-term capital gains (for indexation
purposes).
Vishal Sikka is new Infosys CEO: In a major break
with tradition, India's No 2 IT services firm, Infosys,
brought in an outsider as its CEO after keeping the top
job among its co-founders ever since its inception, in
1981.
SEBI to okay quota, discount for retail investors in
offer for sale: Market regulator SEBI proposes to
reserve for retail investors as much as 10 per cent of
the issue size of offer-for-sale (OFS) of shares through
the stock exchange platform. As part of its efforts to
enhance retail investors participation in OFS, SEBI
also intends to allow sellers of shares to offer
discounts to retail investors. For this purpose, retail
investors will be those who bid for amounts less than
Rs. 2 lakh. Till date, the OFS mechanism launched in
February 2012 is allowed only for promoters so as
to help them achieve minimum public shareholding in
listed companies.
Ordinance to empower SEBI will become an Act
soon: The Ordinance to empower SEBI to curb ponzi
scheme, will be converted into Acts during the Budget
session starting next month. SEBI Ordinance was repromulgated by the previous Government on March
29. The Ordinance aims to provide more teeth to the
capital market regulator SEBI to act against ponzi and
fraudulent schemes, assessing call data record in
securities related offences besides others.
Change in norms for commodity bourses:
Commodity market regulator Forward Markets
Commission has amended regulations for corporate
governance and independent director in commodity
exchange. The regulator has now aligned the norms in
line with the new Companies Act.
Inflation-linked bonds to be made more attractive:
The proposed features will make sure the retail
investor gets payouts at regular intervals and higher
tax-adjusted returns.

With its maiden flight, AirAsia India became the

countrys fourth low-cost carrier, after IndiGo, SpiceJet
and GoAir.
Exports post double-digit growth in May: Exports
increased 12.4 per cent in May (the highest in six
months ) to $28 billion over the same month a year
ago. Imports fell 11.41 per cent in May to $39.23
billion. Gold imports declined to $2.19 billion,
plummeting 72% from May 2013.
India has the potential to grow at 7% annually IMF: The IMFs current forecast for Indias GDP
growth for 2014-15 is 5.4 per cent, rising to 6.3 per
cent in 2015-16. The IMFs optimism on Indias
potential comes on the heels of the World Banks 5.5per cent growth projection for 2014-15 and 6.3 per
cent for 2015-16.
Canara Bank opens New York branch: Canara Bank
has opened a branch in New York, the banks seventh
overseas branch after London, Leicester (UK), Hong
Kong, Shanghai, Bahrain and Johannesburg.
IRDA to launch pilot on life insurance repository
system: This is meant for keeping/storing a policy in
digitised/de-materialised form to enable access as and
when required. During the launch, each life insurer
shall convert a minimum of 1,000 or 5 per cent of the
existing individual policies (issued in hard form and
currently in force), whichever is less for each of the
IRs into electronic form. Each life insurer shall also
issue a minimum of 1,000 or 5 per cent of the total
individual policies issued during the launch period,
whichever is lower, in electronic form for each of the
IRs. In July 2013, the authority had granted certificates
of registration to five entities to act as insurance
repositories.
Banks seek exemption from TDS while selling
mortgaged property: Banks have sought exemption
from tax deducted at source (TDS) when they sell
mortgaged property to recover loans. According to
Section 194-IA of the Income Tax Act, any person,
being a transferee (buyer), responsible for paying to a
resident transferor (seller), any sum by way of
consideration for transfer of any immovable property
(other than agricultural land), is required to deduct an
amount equal to one per cent of the sum as income
tax, at the time of credit of the sum to the account of
the transferor. TDS is not applicable when the
consideration for the transfer of an immovable
property is less than Rs. 50 lakh.

AirAsia takes off, eyes non-trunk routes: AirAsia

India became the countrys latest domestic airline.

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provide inputs and value-addition.

addition. The regulators as
well as the financial
cial intermediaries h
have been asked to
ensure effectivee and timely resolution
reso
of public
grievances. In the
he case of financial sector regulators,
the ministry wants
nts them to identify aat least 10 rules or
processes and even
ven archaic laws, which
wh
are redundant
and not lead to any loss of efficiency
efficiency, so that they can
be repealed. There
ere are five financial sector regulators
Reserve Bank
k of India, Securiti
Securities and Exchange
Board of India,
dia, Insurance Regulatory and
Development Authority,
uthority, Pension Fund
Fun Regulatory and
Development Authority, and Forward
F
Markets
Commission in the country.

By 2025, every seventh netizen will be an In

Indian:
The country would emerge ass a leading player in the
virtual world by having 700 million Internet user
users as
against the 4.7 billion global users
sers by 2025. Half o
of the
4.7 billion will come from the emerging countries
countries, led
by countries like India, Cameroon
oon and Pakistan.
PMs call to improve work culture
ture extends
exten
to
banking sector: Prime Ministers
nisters fiat to Cen
Central
ministries and departments to ensure improved w
work
culture and work environment
nt has been extende
extended to
all financial sector regulators,
s, chiefs of public se
sector
banks, financial institutionss and public se
sector
insurance companies. Finance
ce Ministry has adv
advised
banks to initiate immediate action to improve w
work
culture and work environment
ent in all their off
offices,
branches, premises or any other spaces in ttheir
organisation. As part of thiss exercise, the min
ministry
wants the workspace cleared
d and spruced up and
filed/papers neatly stacked so that a positive w
work
environment is created. The financial
inancial sector regula
regulators
and financial intermediaries are required to ide
identify
forms that are in vogue and shorten
horten them to one p
page.
For quick turnaround in decisions,
isions, the ministry said
decision-making layers should
d be whittled down to a
maximum of four. The entire
ire organisation sh
should
work as a team, with every level
evel being encourage
encouraged to

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Receiving money from

m abroad made easy: State
Bank of India (SBI)
BI) plans to launch pre-paid cards for
the beneficiariess of foreign remittan
remittances to receive and
withdraw money easily.
ly. A Non
Non-Resident Indian having
a deposit account
nt with an overseas SBI branch, only
needs to give instructions using internet/mobile
banking to load
d his kins pre
pre-paid card with the
required funds. In turn, the beneficiary
benefi
in India can
withdraw cash from any of SBIs 43
43,500 ATMs across
the country using
g the card. Online rremittance will not
entail any documentation
entation as the NRI would already be
SBIs customer;
r; the money transfer
tra
would be
instantaneous; and
nd be relatively easy on the remitters
pocket in terms of charges vis
vis--vis other remittance
companies. According
rding to a World Bank
Ba report, the top
recipients of remittances
emittances for 2013 are India ($71
billion), China ($60 billion), the Philippines ($26
billion), Mexico ($22 billion), Nigeria ($21 billion).
self to fulfil financial needs of
Sidbi repositioning itself
MSMEs: The Small
all Industries Development
Deve
Bank of
India (Sidbi) hass zeroed in on four
fou or five areas of
niche financing.. These include financing
fina
receivables,
risk capital, services
ervices sector, and for sustainable
development of the MSME sector.
Banks ultimatum to United
nited Spirits:
Spiri Remove Mallya
from board or no credit: The banks
bank have told United
Sprits that not only will no fresh loans
lo
be granted to
United Spirits, but even the existing
exis
debt to the
company may be recalled if Mallya continues
c
to be on
the companys board.

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Power Minister plans to roll out Gujarats Jyoti

Gram scheme at the national level: Union Power
Minister Piyush Goyal has said that he plans to
replicate Gujarats flagship scheme of Jyoti Gram
Yojana (JGY), which is aimed at providing 24-hour
electricity to non-agriculture consumers in the State.
JGY, announced in 2003, was aimed at making
available 3-phase quality power supply for 24-hours
to all the villages and their hamlets for nonagricultural activities. The scheme provides for a
separate electric feeder for domestic use. It also
provides limited but quality supply of power to
agriculture for about eight hours a day.
RBI allows foreign investors to invest on
repatriation basis: RBI has allowed a host of foreign
investors to invest, on repatriation basis, in nonconvertible/ redeemable preference shares or
debentures issued by an Indian company and listed on
recognised stock exchanges in India. This investment
will be within the overall limit of $51 billion
earmarked for corporate debt. The investors who can
invest in non-convertible/ redeemable preference
shares or debentures include FIIs, qualified foreign
investors deemed as registered Foreign Portfolio
Investors. Long-term investors registered with SEBI
Sovereign Wealth Funds, Multilateral Agencies,
Pension/ Insurance/ Endowment Funds, foreign
Central Banks too will be considered as eligible
investors.

ALL THE VERY BEST FOR RBI GRADE B

2014 EXAM

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