Banking and Financial Awareness – 2 1) In a surprising move the Reserve Bank of India (RBI) on 15 January 2015 cut its repo interest rate by 25 basis points making its first reduction in a year. What is the new repo rate after this cut? – 7.75% Explanation: Repo rate is the level at which RBI lends to commercial banks. RBI cited lower-than-expected inflation, weak crude prices and weak demand as the reasons for its move, as well as the government’s commitment to sticking to a fiscal deficit target. The RBI had been under pressure from government and business leaders to reduce repo rate to increase lending and help kickstart the economy, but RBI governor Raghuram Rajan insisted that his priority was bringing inflation under control. India’s wholesale price index (WPI) for December 2014 rose just 0.11% year-on-year, after staying flat in November 2014. 2) In an important development for India’s insurance industry, the Reserve Bank of India (RBI) on 15 January 2015 gave what three major permissions to country’s bank with regard to their participation in insurance business? - The banks have been allowed to act as brokers for insurers wherein they may undertake insurance agency or broking business departmentally and/or through subsidiary - The banks have also been allowed to set up subsidiaries and joint venture companies for undertaking insurance business with risk participation - The Banks have also been allowed to act as corporate agents without seeking prior approval from the RBI Explanation: Under existing “Bancassurance” guidelines, a bank can act as a corporate agent and sell policy of only one life insurer and one non-life insurance company. The new guidelines allow banks to act as brokers permitting them to sell insurance policies of different insurance companies. However, banks would have to comply with IRDA guidelines wherever applicable. This RBI announcement is expected to increase insurance penetration in the country. 3) As per the latest Finance Ministry data released on 11 January 2015, private sector banks are way behind their PSU peers when it comes to opening financial inclusion accounts under the Pradhan Mantri Jan Dhan Yojana (PMJDY). What was the share of private banks in this flagship financial inclusion programme of the government? – Around 3% Explanation: As per the latest Finance Ministry data, 13 private sector banks have opened 30.47 lakh Jan Dhan bank accounts as against 8.62 crore by state-owned banks as on 7 January 2015. Private banks have a market share of about 20% in Indian banking scenario, but their contribution in this flagship financial inclusion programme of the government is only about 3%. The number of such accounts opened by even regional rural banks (RRBs) stood at 1.92 crore. Prime Minister Narendra Modi launched the financial inclusion scheme on 28 August 2014. The initial target was to open 7.5 crore such accounts, but the later it was revised upwards to 10 crore to be completed by 26 January 2015. However, this target has already been achieved. 4) Which bank launched India’s first contactless debit and credit card on 7 January 2015 that enables one to make payments by just waving the card near merchant terminals instead of swiping the same? – ICICI Bank Explanation: This type of card uses the near-field communication technology to provide customers improved convenience of speed and security over traditional cards as these cards can complete a transaction faster and be more secured as they remain with customer. ICICI Bank has introduced these two cards in Mumbai, Hyderabad and Gurgaon to begin with and it has installed over 1,200 PoS machines capable of accepting contactless payments in these cities. The bank launched two cards with the new technology – the Coral Contactless Credit Cards and the Expressions Wave Debit Cards – and both can also be used as regular cards at all merchant terminals (in other cities) 5) Union Government on 16 January 2015 launched a new Rs. 200 crore venture capital fund (VCF) for the Scheduled Caste (SC) community with the objective of promoting entrepreneurship in the community. Which financial entity will act as sponsor, settler and Asset Management Company (AMC) for this fund? – IFCI Explanation: IFCI will act as sponsor, settler and asset management company to operate the scheme, and would contribute Rs. 50 crore that would comprise Rs. 5 crore as sponsor and Rs. 45 crore as investor. The main objective of the fund is to provide support and concessional finance to entrepreneurs belonging to the SC community. Under the scheme, financial assistance up to Rs. 15 crore for a period up to six years would be provided to SC entrepreneurs. SCs constitute around 16.6% of the country’s total population. 6) The insurance regulator Insurance Regulatory and Development Authority (IRDA) expressed concern over the skewed penetration of health insurance in India with four states accounting for 62% of premium. Which four states are these? – Maharashtra, Tamil Nadu, Karnataka and Union Territory of Delhi Explanation: This concern was expressed in the Annual Report for 2014-14 that was published during January 2015. While these four states contributed 62% of total health insurance premium, the rest 32 States/UTs contributed only 38% of total premium. In fact, the health insurance premium from 8 sister States of North Eastern India was only118 crore (0.6%) for 2013-14. One of the reasons for the skew in premium is that 46% of health insurance premium comes from group policies sold to corporates. As a result the coverage is highest in states with high level of industrialization. 7) The Insurance Regulatory Authority of India (IRDA) has got an actuary after a gap of over three years. What is the name of the person assigned the post of member (actuary) in IRDA? – Pournima Gupte Explanation: The post of member (actuary) had been lying vacant after R. Kannan retired from IRDA in 2011. The post was kept vacant for almost 3 years resulting in a major bottleneck for insurance companies in launching new schemes. Gupte, who was originally with Life Insurance Corporation (LIC), had worked as actuary at Reliance Life Insurance and IDBI Federal. This is also for the first time that a woman has been appointed on the board of IRDA. An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms. 8) The Security and Exchange Board of India (SEBI) on 8 January 2015 proposed e-IPO norms where investors can bid for shares through Internet and eventually on mobiles. This was done so as to boost fund raising from markets. What is the proposed timeline for listing of shares under e-IPO? – 2 to 3 days Explanation: Under the new norms, SEBI has proposed to drastically cut the timeline for listing of shares within 2-3 days of the IPO, as against 12 days currently. For already listed companies as well, SEBI has proposed a fast-track route for raising of funds through FPOs (Follow-on Public Offers) or Rights Offers (where funds can be raised from existing shareholders). The fast-track route of raising capital has been proposed for companies having public shareholding market valuation of as low as Rs. 250 crore, as against Rs. 3,000 crore currently. SEBI has invited public comments till January 30, after which it would put in place final norms for e-IPO as also for fast-track issuances. 9) London-based financial journal “Central Banking” named who as the winner of the “Governor of the Year” award on 13 January 2015? – Raghuram Rajan, RBI Governor Explanation: This is the second major prize for RBI Governor since he held the helm of RBI a little over a year ago. He was named in recognition of the part the RBI and its staff have been playing in bringing macroeconomic stability to the Indian economy, in creating more competition and new growth opportunities in the banking and financial markets, as well as in expanding financial inclusion. He had earlier won the “Best Central Bank Governor” award for 2014 by Euromoney magazine. Rajan has been credited with stabilising the rupee and controlling stubbornly-high inflation that rocked India’s economy for the last three years. 10) Which Middle-east based bank during January 2015 launched region’s first online-only consumer banking business will offer personal finance products and credit cards? – Gulf International Bank (GIB) Explanation: Gulf International Bank (GIB) is a Bahrain-based entity but is 97%-owned by the Saudi government. The online-only retail banking business launched by it has been launched for Saudi Arabia and has been named as “Meem”. It aims to have around a 3% share of the Saudi consumer banking market by 2020. Saudi Arabia is Middle-East’s largest economy and around two-third of the country’s population is under 30. Until now, GIB was solely a wholesale bank and provided services to big companies and financial institutions. It needed a bailout from the Saudi government after suffering $757 million of losses in 2007 from investing in complex debt instruments linked to the U.S. subprime housing crisis.
Posted on: Mon, 26 Jan 2015 00:41:22 +0000