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ECB keeps key rate unchanged at 0.

5%
September 6th, 2013

The 23-member governing council of European Central Bank has left its benchmark
interest rate unaltered at a record low of 0.5%. The council said that the slowly recuperating
eurozone economy didnt need a further stimulus.
The 17 European Union member countries that used the euro came out of recession
in the second quarter when the economy posted 0.3% growth from the quarter before,
discontinuing a series of 18 months of falling output.
About European Central Bank

Established in 1998 through Treaty of Amsterdam in 1998. It is one of the


seven institutions of the European Union (EU) listed in the Treaty on European
Union(TEU).
Headquarters: Frankfurt, Germany.
Current President: Mario Draghi
It is central bank for the euro and administers the monetary policy of the 17 EU member
states which constitute the Eurozone. However, capital stock of the bank is owned by the
central banks of all 28 EU member states.
Primary Objective: To maintain price stability within the Eurozone. It has this single illdefined primary objective, with other objectives subordinated to it.
Basic Tasks of ECB:

To define and implement the monetary policy for the Eurozone

To conduct foreign exchange operations

To take care of the foreign reserves of the European System of Central Banks

To promote smooth operation of the financial marketinfrastructure under


the TARGET2 payments system and the technical platform (currently being developed) for
settlement of securities in Europe (TARGET2 Securities).
Exclusive right to authorize the issuance of euro banknotes.

RBI allows companies to use ECB for general corporate


purposes
September 5th, 2013

In a bid to attract capital flows, the RBI relaxed the External Commercial Borrowing
(ECB) norms by permitting companies to use funds raised from their foreign equity holder
company with minimum average maturity of 7 years for general corporate purposes. Till
now borrowings in the form of ECB were not allowed to be used for general
corporate purpose.
Nevertheless, the RBI has put certain conditions. As per the conditions, the minimum paidup equity of 25% should be held directly by the lender (overseas partner) and the
repayment of the principal will commence only after completion of minimum average
maturity of seven years and no prepayment will be allowed before maturity.
What is External Commercial Borrowing (ECB)?

Any money that has been borrowed from foreign sources for financing the
commercial activities in India are called External Commercial Borrowings.

The Government of India permits ECBs as a source of finance for Indian


Corporates for expansion of existing capacity as well as for fresh investment.
The ECBs are defined as money borrowed from foreign resources including the following:

Commercial bank loans

Buyers credit and suppliers credit

Securitised instruments such as Floating Rate Notes and Fixed Rate Bonds etc.

Credit from official export credit agencies and commercial borrowings from the
private sector window of Multilateral Financial Institutions such as International Finance
Corporation (Washington), ADB, AFIC, CDC, etc.
Objective of External Commercial Borrowing (ECB):

Government permits the ECBs as an additional source of financing for expanding


the existing capacity as well as for fresh investments. The ECB policy of the Government
seeks to emphasize the priority of investing in the infrastructure and core sectors such as
Power, telecom, Railways, Roads, Urban infrastructure etc.

There is also emphasis on the need of capital for Small and Medium scale
enterprises.
How ECB is different from FDI?

It must be noted that ECB means any kind of funding other than Equity. If the
foreign money is used to finance the Equity Capital, it would be termed as Foreign Direct
Investment.

The ECB should satisfy the ECB regulations stipulated by the Government or its
agencies such as RBI. The Bonds, Credit notes, Asset Backed Securities, Mortgage Backed
Securities or anything of that nature are included in ECB.
The following are not included in the ECBs

Any Investment made towards core capital of an organization such as equity


shares, convertible preference shares or convertible debentures. We should note here that
those instruments which can be converted into equity are called convertible. The
convertible instruments are covered under the FDI Policy.
Any other direct capital is not allowed in ECB.

Lok Sabha passes PFRDA Bill 2011


September 5th, 2013

The Pension Fund Regulatory and Development Authority Bill (PFRDA), 2011 which
aims to regulate the New Pension System (NPS) has been passed in the Lok Sabha with
official amendments. The bill was introduced in the lower house in March 2011 to provide for
a statutory regulatory body. Currently the PFRDA has a non-statutory status. The legislation
seeks to empower PFRDA to regulate the New Pension System (NPS).
Some highlights of PFRDA Bill 2011:

It provides subscribers a wide choice to invest their funds for assured returns by
opting for government bonds as well as in other funds depending on their capacity for
risk.

It allows for withdrawals from the individual pension account subject to the
conditions, such as, purpose, frequency and limits, as may be specified by the
regulations.

It makes the Pension Fund Regulatory and Development Authority a statutory


authority. Presently, it has non-statutory status.
What is the main reason behind providing PFRDA a statutory status?

NPS which is compulsory for government employees (exceptdefence) has been


launched for all citizens of the country including un-orgnised sector workers, on voluntary
basis, with effect from May 1, 2009. Further, the Government has launched the cocontributory pension scheme titled Swavalamban Scheme in the Budget of 2010-11.
Currently, the number of subscribers under NPS is 52.83 Lakh with a corpus of Rs. 34, 965
crore. In order to effectively invest and manage huge funds belonging to a large number of
subscribers and to ensure the integrity of NPS, establishment of a statutory PFRDA with well
defined powers, duties and responsibilities is considered absolutely necessary and would
benefit all NPS subscribers.

RBI asks banks to consider e-KYC a valid process


September 5th, 2013

In a notification issued by the Reserve Bank of India, banks have been asked to avail the
electronic Know Your Customer, e-KYC service, launched by the Unique Identification
Authority of India,UIDAI. The notification directed banks to revise their KYC policy by
accepting the e-KYC as a valid process for KYC verification under thePrevention of Money
Laundering (Maintenance of Records) Rules, 2005. As per the notification, the
information containing demographic details and photographs made available from UIDAI as
a result of e-KYC process may be treated as an Officially Valid Document under PML
Rules.
What
is
e-KYC?
The e-KYC service was launched by the UIDAI to help people link their existing records,
like ration cards, pension accounts, license and certificates, to their Aadhaar numbers in a
safe and easy manner.

September 1st, 2013

Curiosity to take pictures of solar eclipse

Mars rover Curiosity took pictures of the planets moon, Phobos, eclipsing the sun. NASAs
Curiosity rover landed on the red planet in August 2012 for a 2-year mission to study if the
planet similar to Earth in the solar system ever had the chemical ingredients for supporting
life.
RBI forbids overseas buying, plus point for Indian realty

In a bid to curb the outflow of capital from the country, the RBI has cut down the annual
cap on automatic outflows from $2,00,000 to $75,000 per individual. In addition to this, the
central bank has also imposed a ban on overseas real estate purchases with immediate
effect. The move expected to benefit the domestic real estate as the capital which otherwise
would have been diverted overseas will now remain in the country.
Indias foreign exchange reserves deplete by $1.08 billion

As per RBIs data, Indias foreign exchange (forex) reserves reduced by $1.08 billion to
$277.72 billion for the week ended Aug 23, 2013. The Special Drawing Rights (SDRs)
decreased by $4.5 million to $4.38 billion for the same period. Gold reserves remained at
the same level at $20.74 billion.
Decline in Rupee may not impact agriculture sector: NABARD

According to National Bank for Agriculture and Rural Development (Nabard) head Prakash
Bakshi the continuing depreciation of rupee against the dollar is unlikely to make any
negative impact on the agriculture sector. In the event rupee decline impacts the prices of

fertilizers or diesel it would be compensated either by the way of subsidy or by hiking the
minimum support price.
Delhis tops in per capita income in India

As per Delhi Development Report 2013, Delhis average per capita income stands at more
than Rs 2 lakh per year in 2012-13 which makes it the highest in India. It is around 3 times
more than the national average per capita income.
India approaching IMF for foreign exchange not imminent: Planning Commission

Planning commission deputy chairman Montek Singh Ahluwalia has assured that India has
adequate forex reserves to manage the current situation and ruled out
approaching the InternationalMonetary Fund(IMF) for help, saying the economic
situation has not reached a point where outside aid is warranted. Indias foreign exchange
reserves were up at 278.602 billion $ as of August 9, 2013.
Pakistan unable to qualify for the Hockey World Cup for the first time

Pakistan is aggrieved as the country lost berth for the Hockey World Cup 2014 tournament.
It is for the first time in Pakistans sporting history that it has been unable to qualify for the
World Cup Hockey tournament as it lost to South Korea in the semifinal of the Asia Cup
being held in Malaysia, a match they needed to win to qualify.
Pakistan not considering granting MFN status to India

Pakistans Finance Minister has communicated that, at present, it is not in talks to grant
of Most Favoured Nation (MFN) status to India. The remarks came within days of World
Bank suggesting in a report that Pakistan will benefit from granting the MFN status to India.
Pakistan already enjoys the MFN status which India extended to it in 1996. The bilateral
trade between the countries was at $2.35 billion in 2012-13, as against $1.93 billion in fiscal
2011-12.
RBI not considering to convert idle gold into bullion

Responding to the reports that Reserve Bank of India (RBI) is mulling over multiple
measures, including using thousands of tone of idle gold jewellery in temples, to replace for
import, the central bank said it did not have any proposal to convert idle gold from temples
and individual trusts into bullion.
President confers Khel Ratna on Ronjan Sodhi, Arjuna Award on Virat Kohli

President Pranab Mukherjee conferred countrys highest sporting honor- Rajiv Gandhi Khel
Ratna Award on the topnotch shooterRonjon Sodhi. Cricketing star Virat Kohli was
among the 15 sportspersons honored with Arjuna Award. Among the other Arjuna Awardees
were Kavita Chahal, for boxing, Gaganjit Bhullar for Golf, Saba Anjum, for hockey,
Rajkumari Rathore, for shooting, PV Sindhu, for badminton and Neha Rathi, for
wrestling.

A total of 5 coaches were honoured with Dronacharya awards. KP Thomas was honoured
with the Award for their life time contribution to coaching in Athletics and Raj Singh in
Wrestling.