For M-Pesa Vodafone partners with ICICI Bank

November 12th, 2012

Vodafone India has launched its mobile money transfer and payment service M-Pesa in India. The telecom giant has inked a partnership with ICICI Bank to extend this service in India. Vodafone will be offering its customers a mobile money account with ICICI Bank and a mobile wallet issued by MCSL (Mobile Commerce Solutions Ltd), via this service. The M-Pesa service will allow customers to make cash deposits and withdrawals from designated outlets as well as make cash transfers to any mobile phone or any bank account in India. Arvind Kejriwal: HSBC Bank running hawala (money laundering) transactions
November 14th, 2012

India Against Corruption (IAC) charged HSBC Bank with unning hawala laundering) transactions. IAC members alleged that Mukesh and Anil Ambani among others, had crores of rupees sitting in Swiss banks. Those named were part of the list of 700 people who had accounts with HSBC banks in Switzerland. The list was shared by the French government with India, which, however, did not reveal any name, and the matter is pending in the Supreme Court. British Tax authorities probing charges against HSBC
November 14th, 2012

(money

The British tax authorities launched an investigation allegations of money launderingagainst HSBC.

into

HSBC Bank has been accused of opening offshore bank accounts in Jersey for serious criminals living in Britain. This move from British Tax authorities came after a whistleblower was secretly provided a detailed list of names, addresses and bank accounts of HSBCs alleged clients. These were said to include names of several people with criminal convictions, including gun-runners and drug dealers. Contrast with India

Observers are contrasting the prompt action taken by British authorities with the Indian governments response to similar allegations against HSBC involving Indian clients, where Indian government took no action against HSBC when India AgainstCorruption (IAC) charged HSBC for alleged involvement in Hawala (Money Laundering). Also, Indian Govt took no action since more than a year after the French government gave India a CD containing names of 700 Indian clients who had accounts in HSBCs Geneva branch. Finance Minister asks RBI to issue the final guidelines for new banking licenses
November 18th, 2012

The Finance Minister P Chidambaram has asked RBI to finalize the guidelines for issue of new banking licenses and commence accepting applications applications from interested entities. But, RBI insists on amending the Banking Regulation Act before such a move. What RBI wants? RBI wants that before it issues final guidelines, the overall Banking Laws (Amendment) Bill, 2011 should be passed by the Parliament. The Bill seeks to empower the RBI to supersede the boards of directors of banks for a period not exceeding six months, in the interest of depositors or for securing proper management of any banking company. What Finance Minster (FM) says? The Act will indeed be amended, hopefully in the winter session or at most in the Budget session. As issuance of the first license would take six to eight months, RBI doesnt need such powers immediately. By the time the license is issued and the bank comes into existence and begins to function, the Act would have been amended Madhav Chavan wins WISE Prize The Nobel Prize for education
November 17th, 2012

Dr Madhav Chavan has won the WISE Prize. The WISE Prize is considered to be the "Nobel prize forEducation". Prize of $500,000 (314,000) In recognition for his education work in the slums ofMumbai. His efforts to provide lessons in literacy and numeracy for disadvantaged children and adults in India. About Dr. Madhav Chavan and his NGO PRATHAM Dr. Madhav Chavan Indian social activist and educationist Co-founder and CEO of the educational NGO Pratham Madhav Chavan was born in Maharastra to Yashwant Chavan, the founder of the Lenin-inspired Lal Nishan Party. Mr. Chavan started his mission to educate the underprivileged slum children of Mumbai in the late 1980s after he came back from USA. His NGO Pratham is the largest NGO working to provide quality education to the underprivileged children of India. Pratham Largest NGO working to provide quality education to the underprivileged children of India.

Established in 1994 to provide education to the children in the slums of Mumbai city. Since then, the organization has grown both in scope and geographical coverage. Dr Madhav Chavan is the co-founder and CEO of the NGO Pratham. Income Ceiling for EWS and LIG housing raised by Govt
November 17th, 2012

Government has settled to raise the bar on yearly income needed to qualify for benefits under its existing housing schemes for Economically Weaker Sections (EWS) and Lower Income Groups (LIG). The move will benefit 20 lakh (2 million) people as more people will now qualify for taking benefits under Rajiv Awas Yojna (RAY) and EWS Housing Schemes. Now, Income criteria to qualify for EWS housing category: Rs 1 Lakh Income criteria to qualify for LIG housings category: Rs 2 Lakh Accordingly, the decision will be communicated to banks and state governments for effective implementation. By 2017, US can become worlds biggest oil producer
November 16th, 2012

The worlds foremost energy watchdog, the InternationalEnergy Agency (IEA) in its recent report World Energy Outlook 2012 has held that US can become the worlds largest oil producer by 2017. How would Predictions. How would this happen ? US would benefit from so-called unconventional sources of oil and gas, including shale gas and shale oil, derived from fracking blasting dense rocks apart to release the fossil fuels trapped within. These sources could fuel the USs energy independence, and make the country the worlds biggest oil producer by 2017. Predictions for USA The IEA also forecasts that the United States will become worlds biggest oil producer by 2017 rely more on natural gas than either oil or coal by 2035 due to its cheap domestic supply and uses by industry and electricity generators Global Predictions Globally, the IEA indicates that: this happen ? Predictions for USA and Global

more than 90% of oil and gas from the Middle East could be sold to Asia, and chiefly to rapidly developing countries such as China fossil fuels will dominate the worlds energy picture as it has in the past But, in the power sector, renewable energy (wind, solar, and hydroelectricity) use worldwide will be second to coal by 2035 due to technology improvements and continued subsidies Russia, which remains the largest individual energy exporter throughout the period, sees its revenues from oil, natural gas and coal exports rise from $380 billion in 2011 to $410 billion in 2035 huge increases in greenhouse gas emissions that would put hopes of curbing dangerous climate change beyond reach.

Thus, predictions in The IEA in its World Energy Outlook 2012: fossil fuels will dominate the energy sector through 2035 United States will become the worlds largest oil producer by 2017, overtaking both Saudi Arabia and Russia US will become almost energy independent by 2035 OPEC will be exporting 90 percent of its oil to Asia, changing the security dynamics in the Middle East. The IEA is not the only agency with this prediction; Citigroup Inc. indicated that the United States will achieve this goal before the end of this decade. Banks to introduce new CTS-2010 by December 31, 2012
November 14th, 2012

Banks all over India are in the process of issuing fresh-look cheques with more security and standardized features to all its customers by December 31, 2012. From January 1, 2013, cheques which do not conform to CTS-2010 standards would not be entertained by banks.

What is Cheque Truncation? We go to a bank and sign a Cheque now, Truncation is the process of stopping the need for movement of the physical cheque (paper cheque leaves) from one banks branch to other banks branch. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc. What is Cheque Standardization and what does CTS 2010 Standard mean ? What are the benefits of adopting CTS-2010 ? How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ? How are the images of cheques taken ? What are the modes in which banks can participate in CTS ? What is Cheque Standardization and what does CTS 2010 Standard mean ? Growing use of multi-city and payable-at-par cheques for handling of cheques at any branches of a bank, introduction ofCheque Truncation System (CTS). CTS-2012 is a set of benchmarks towards achieving standardization of cheques issued by banks all over India. The benchmark prescriptions are collectively known as "CTS-2010 standard". These include provision of mandatory minimum security features on cheque forms such as quality of paper, watermark, banks logo in invisible ink, void pantograph and standardization of field placements on cheques. Indian Banks Association (IBA) and National Payments Corporation of India (NPCI) are co-ordinating with the banks on implementation of the new standard. The benchmark prescriptions known as CTS-2010 standard are to be implemented by December 31, 2012. Benefits of adopting CTS-2010 The security features in cheque forms will assist the presenting banks to identify the genuineness of the drawee banks instruments while handling them in the image based scenario. The homogeneity in security features will act as deterrent against frauds. The fixed field placement specifications will facilitate straight-through-processing at drawee banks end through the use of optical/image character recognition technology. What are the benefits of CTS to customers of banks? Speeds up the process of settlement. No fear of loss of instruments in transit. Further, limitations of the existing clearing system in terms ofgeography or jurisdiction can be removed. Use of images obviates the need to handle and move physical cheques at different points. The scope for frauds inherent in paper instruments is, thus, greatly reduced. If required, an image replacement document can be printed by a Government Department itself. The benefits from CTS could be summarized as follows

Shorter clearing cycle Superior verification and reconciliation process No geographical restrictions as to jurisdiction Operational efficiency for banks and customers alike Reduction in operational risk and risks associated with paper clearing How would be the uniqueness of a physical cheque be captured and imparted to the cheque image ?

To ensure only images of requisite quality move in the CTS processing cycle, there is a rigorous quality check process at the level of the Capture Systems and the Clearing House Interface (of the presenting bank). The solution encompasses Image Quality Assessment (IQA) at different levels. Further, the new cheque standard "CTS-2010" prescribes certain mandatory and optional security features to be available on cheques, which will also add to the uniqueness of the images. How are the images of cheques taken ?

Images of cheques are taken using scanners. How the image and data transmitted over the network is secured ?

CTS is protected via a comprehensive Public Key Infrastructure (PKI). CTS is compliant to the requirements of the IT Act, 2000. What are the modes in which banks can participate in CTS ? There are two modes in which banks may participate in CTS

1. Direct membership: Banks may participate as direct member provided they have a settlement account with the settlement bank and have put in place necessary infrastructure for participating in CTS. 2. Indirect / Sub-membership: Banks may become sub-members / indirect members of the direct members by using the infrastructure and / or settlement services of the direct members. The settlement for such indirect / sub-member could be done either directly (if such banks have settlement accounts with the settlement bank) or through the direct member through whom they are participating. Chanda Kochhar of ICICI Most powerful Business woman in India: Fortune Magazine
November 18th, 2012

Fortune Magazine has named Ms Chanda Kochhar, MD and CEO ofICICI Bank as the most powerful business woman in Business inIndia. She has been named for the same for second time in a row. The top 3 most Powerful Business woman in India:

1. Chanda Kochhar of ICICI 2. Mallika Srinivasan of TAFE 3. Aruna Jayanthi of Capgemini India Kavery Kalanithi of Sun Tv Indias top paid Business woman
November 18th, 2012

As per Fortune Magazine, Ms Kavery Kalanithi of Sun TV group has retained her position as the Indias top paid businesswoman in 2012. Pay packages of Top 4 Business women in India: 1. 2. 3. 4. Kavery Kalanithi, Executive Director, Sun TV Group: Rs 57 Crore Urvi A. Piramal, Chairperson, Peninsula Land: Rs 7.3 Crore Preetha Reddy, MD, Apollo Hospital Enterprises: Rs 6.9 Crore Vinita Singhania, MD, JK Lakshmi Cement: Rs 5.9 Crore PSBs profits would have been wiped out were they asked to maintain 70% PCR
November 18th, 2012

Thanks to RBI, which had withdrawn the requirement for 70% loan loss cover from September 2011. Else, Public sector banks, which have decreased their PCR (Provision Coverage Ratio) in the last one year, would have seen their quarterly profits wiped out, were they asked to maintain PCR of 70%. It is interesting to note that although, RBI had withdrawn the requirement for 70% loan loss cover from September 2011, private sector banks, whose asset quality is better than their public sector counterparts, have maintained provision covers of more than 70%. Except a few exceptions, majority of PSBs (Public Sector Banks) have reported a sequential decrease in their PCR, while private sector banks have performed better.

Source: Business Standard

Clearly from the table, we can see that SBIs quarterly Net Profit was 3,658.14 Crores and its PCR was 62.80% and in case it was to maintain PCR of 70%, SBI would have almost wiped out its quarterly profit. Now, if we analyze the case of Indian Overseas Bank, it has a quarterly net profit of Rs 158.43 Crores. Were it asked to maintain PCR of 70%, then Indian Overseas Bank would have needed 680 Crores i.e. 4.3 times more than its net profit. The countrys top private sector banks ICICI Bank and HDFC Bank had a PCR of 78.7% and 82%, respectively, at the end of the September quarter. What is Provision Coverage Ratio (PCR) ? PCR is the ratio of provision to gross non-performing assets (NPAs). A key relationship in analyzing asset quality of the bank. A measure that indicates the extent to which the bank has provided against the troubled part of its loan portfolio. A high ratio suggests that additional provisions to be made by the bank in the coming years would be relatively low (if gross NPAs do not rise at a faster clip). Thus, PCR refers to the percentage of the loan amount that the bank has set aside as provisions to meet an eventuality where the loan might have to be written off it becomes irrecoverable. It is a measure that indicates the extent to which the bank has provided (set aside money to bear the loss) against the troubled part of its loan portfolio. PCR = Cumulative provisions / Gross NPAs Thus, more the NPAs lesser will be the PCR. Westpac Banking Corporation opens its firsrt branch in Mumbai
November 18th, 2012

Westpac Banking Corporation (Westpac Institutional Bank) received its banking licence from RBI on April 16, 2012. Westpac has operated in India since 2007 through its representative office. Westpac Institutional Bank (WIB): The Institutional Bank, which contributed 26% of Westpacs total earnings in 2010, provides advisory and wholesale banking services to Westpacs corporate and institutional customers. Westpac Banking Corporation Australias Oldest Bank A multinational financial services, one of the Australian "big four"banks and the second-largest bank in New Zealand. Gail Kelly (CEO and Managing director) Swedens Volvo to invest in India November 18th, 2012 Volvo is a Swedish truck, bus and earth-moving equipment maker. Volvo is the worlds 2nd largest truck maker by revenue.

Volvo declared its plans to invest R s 3,800 Crore in India in next few years. Of this amount, it will be investing Rs 1,800 Crore in a joint venture with Eicher Motors. Volvo and Eicher have a 50:50 joint venture VE Commercial Vehicles which sells Volvo brand of trucks and Eicher brand of trucks and buses. In India, Volvo has a good presence in Bus segment. Eicher is a commercial vehicle manufacturer in India. Inflation quite high: Subbarao
November 20th, 2012

RBI Governor D. Subbarao held that the inflation is quite high at 7.45%. He remarked over the falling of headline inflation to 7.45% in October 2012 from 7.81% in September 2012. The comment from RBI Governor has come at a time when Govt and industry are hoping of monetary easing by RBI due to falling inflation and negative industrial growth.

What is e-tailing ?
November 19th, 2012

e-tailing = electronic retailing selling of retail goods on the Internet. e-tailing or "virtual storefronts" on Web sites with online catalogs, sometimes gathered into a "virtual mall" Online shopping or online retailing is a form of electronic commerce Consumers directly buy goods or services from a seller over the Internet without an intermediary service. The largest online retailing corporations are E-Bay and Amazon.com, both of which are US-based. e-tailware e-tailing has resulted in the development of software tools for creating online catalogs and managing the business connected with doing e-tailing. These are known as etailwaree-commerce can be divided into: e-tailing Gathering and use of demographic data through Web contacts Electronic Data Interchange (EDI), the business-to-business exchange of data e-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters) Business-to-business buying and selling The security of business transactions. Dr Ami Bera: 3rd Indian-American elected to Congress
November 19th, 2012

Dr. Ami Bera Indian-American physician from California Won the Congressional election fromCalifornia

3rd person of Indian-origin to be elected to the US House of Representatives Other Indian-Americans elected in Congress in past:

1. Dalip Singh Saund was the 1st Indian-American elected to the House in 1950s. 2. Bobby Jindal: 2nd Indian-American to be elected. He was elected in 2005 and 2008. He is now the Governor of Louisiana. K.C.Pant passes away
November 18th, 2012

Indias former defence minister and Planning Commission deputy chairman Krishna Chandra Pant (81) passed away. Pant was Indias defence minister between 1987 and 1989, when the Congress party was in power under then prime minister Rajiv Gandhi. Pant was Defence Minister in Rajiv Gandhis Cabinet when the CAG report on Bofors Howitzer acquisition was tabled in Parliament and defended the government during those troubled days. Pant became Deputy Chairman of Planning Commission in 2000. Pant was also the Chairman of 10th Finance Commission. Kisan Credit Cards (KCCs) to be converted into ATM cards
November 18th, 2012

Finance Minister P.Chidambaram informed that the State-owned bankshave been asked to strictly adhere to the March, 2014 time-line for converting all Kisan Credit Cards (KCCs) to ATM cards. State-owned lenders were asked to convert more than 11.39 crore KCCs to ATM cards within two years starting from April 1, 2012. As per NABARD, as on March 31, 2012, the banking system has issued 11.39 crore KCCs and sanctioned loans to the tune of Rs 5,21,617 crore since the inception of the scheme in 1998-99 What is NPA ? What are the Loan classification norms ? What is Provisioning Coverage Ratio (PCR) ?
November 20th, 2012

NPA = Non-Performing Asset Loans and advances given by the banks to its customers is are an Asset to the bank. Just for the sake of simplicity, we can understand that a loan (an asset for the bank) turns as NPA when the EMI, principal or interest component for the loan is not paid within 90 days from the due date. Thus a Bad Loan is an asset that ceases to generate any income for the bank. Asset or Loan Classification Norms The assets or loans are classified as:1. Standard Assets 2. Sub-standard Assets

3. Doubtful Assets 4. Loss Assets Now, in order to ensure that banks are not affected due to defaults, RBI has directed the banks to make provisions or set aside money when an account turns bad. Banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the

quarter. A Loss Asset is considered uncollectible and of such little value for the bank in retaining the account on its book and ideally, such loans should be written off. Thus, Loss assets should be written off. If loss assets are permitted to remain in the booksfor any reason, 100% of the outstanding should be provided for. Apart from above, there are Guidelines by RBI for provisions under special circumstances. Unsecured exposure is defined as an exposure where the realizable value of the security, as assessed by the bank/approved valuers/RBIs inspecting officers, is not more than 10%, ab-initio, of the outstanding exposure. Exposure includes all funded and non-funded exposures. Security are tangible security properly discharged to the bank and do not include intangible securities like guarantees, etc. Restructuring of assets Standard Assets upon restructuring > Sub-Standard Assets . Thus, NPA upon restructuring slips into further lower asset classification categories as per above table.

Also, an NPA upon restructuring can also be up-graded to the standard category after observation of satisfactory performance during the specified period i.e. on repayment of outstanding amount by the borrower. Provisioning Coverage Ratio (PCR):

The ratio of provisioning to gross non-performing assets Indicates the extent of funds a bank has kept aside to cover loan losses. Related News: PSBs profits would have been wiped out were they asked to maintain 70% PCR As per RBI guidelines, NPA is defined as under: Non performing asset (NPA) is a loan or an advance where;

1. interest and/ or installment of principal remain overdue for a period of more than 90 days in respect of a term loan, 2. the account remainsout of order in respect of an Overdraft/Cash Credit (OD/CC), 3. the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted, 4. the instalment of principal or interest there on remains overdue for two crop seasons for short duration crops, 5. the instalment of principal or interest there on remains overdue for one crop season for long duration crops, 6. the amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitisation transaction undertaken in terms of guidelines on securitization dated February 1, 2006. 7. in respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment. Net NPA = Gross NPA (Balance in Interest Suspense account + DICGC/ECGC claims received and held pending adjustment + Part payment received and kept in suspense account + Total provisions held). PSBs see a record rise in Gross NPAs.
November 20th, 2012

The Gross NPAs (Non Performing Assets) to advances ratio Sector Banks) rose to a record high at the end of September 2012.

for

PSBs

(Public

As of September 2012 the ratio of gross NPA to advances was the highest for SBI at 5.15 i.e. SBI had Rs 5.15 in stressed assets for every Rs 100 it lent. Priority sector contributed to largest share of NPAs for SBI & its associates and nationalized banks. As per RBI the sudden rise in NPAs was mainly attributed to:

deterioration in asset quality of the banks

slowdown prevailing in the domestic economy as well as the external front inadequate appraisal and monitoring of credit proposals during the boom period of 2003-07 Why is asset quality of a bank important ? The asset quality of banks is an important because:

it is an indicator of their financial health it reflects the efficacy of banks recovery environment.

credit

risk

management

and

the

In order to improve the NPA management framework, the RBI its in 2012-13 Monetary Policy has advised the banks: To put in place a robust mechanism for early detection of signs of distress, and implement measures to preserve the economic value of assets. Prepare a proper system-generated segment wise data on their NPA account. Rakesh Jhunjhunwala: Indias Warren Buffet
November 20th, 2012

Rakesh Jhunjhunwala Indian investor and trader A qualified Chartered accountant Owner of Rare Enterprises Chairman of Aptech Limited and Hungama Digital Media Entertainment Pvt. Ltd Net worth: USD 1.25 billion (as of 2011) Started his career in 1985 when the BSE Sensex was at 150. He is regarded as one of the best Investors in the world and is famous as Indias Warren Buffet. Flipora: Social Surfing service
November 20th, 2012

Flipora A Social Surfing service A Personalized Search (webpage recommendation) and Discovery engine Made by Infoaxe Inc. Formerly called InfoAxe, Flipora grew from a service that helped users simply find sites theyve already visited. Flipora helps user remember the great websites (s)he visits (with web history search) and recommends great websites based on what user liked in the past. It aims at helping internet users find interesting web-pages on the topics that they like. It provides significant social surfing recommendations to help users discover and enjoy new web content and sites.

Flipora currently has 8 million users. Fliporas Indian Connection:

Founded by two Indian graduates from Stanford University. Jonathan Siddharth and Vijay Krishnan How does Flipora work? Negative side of Flipora How does Flipora work?

Flipora uses a users browsing history in order to understand their interests and offer them personalized recommendations. It also uses the aggregate anonymized browsing histories of its millions of users to identify fresh and popular web-pages on different topics. It helps users discover new websites based on the interests that their browsing habits shows. Negative side of Flipora:

In order to promote itself, Flipora utilizes spam and phishing techniques to gather email addresses. When one signs up (s)he inadvertently gives Flipora an access to his/her email address book and Flipora uses that information to send all of their friends, family and co-workers junk mail inviting them to also use Flip, Flipora and Infoaxe. It is held that Flipora might also be selling email address book information to third party spammers. Rajiv Gandhi Equity Savings Scheme (RGESS) set for launch
November 20th, 2012

RGESS (Rajiv Gandhi Equity Savings Scheme) The finance ministry is set to notify the Rajiv Gandhi Equity Savings Scheme (RGESS). Finance Minister P Chidambaram had approved the RGESS on September 21, 2012. Implementation delayed due to the deliberations on inclusion ofMutual Funds (MF) in it. Thus, further consultations with the RBI, SEBI and the law ministry on the coverage of RGESS. It might be so that only MFs fitting in specific conditions would be allowed. Tax benefits for investing up to Rs 50,000 in the capital markets for first-time retail investors with an annual income of Rs 10 lakh. The scheme initially announced in Budget 2012 had allowed tax benefits for investments in stocks. Later, Exchange Traded Funds (ETFs) and MFs were included under its ambit. Open to retail investors who have opened demat accounts but have not made any transactions in equity or derivatives till the notification of the scheme. All those opening fresh accounts would also be eligible to participate in RGESS. Investments can be made in various installments during a year, Total lock-in period: 3 years, including an initial lock-in of one year in the stock/ETF/MF in which the money has been invested.

Stocks listed under BSE 100 or CNX 100 or those of PSUs which are Navratnas, Maharatnas and Miniratnas would be eligible. Investment in follow-on offers of these companies would also be eligible for tax deduction. Anil Dev Singh new Chairperson of IOA November 23rd, 2012 Anil Dev Singh, the former Chief Justice of Rajasthan High Court appointed as the new Chairperson of the Election Commission of The Indian Olympic Association (IOA) after S.Y. Quraishi resigned from his post on November 17, 2012. The other members of the panel are Justice V.K. Bali (retd.) and Justice J.D. Kapur (retd.). RBI advises banks not to grant loans for purchase of gold in any form November 23rd, 2012 The RBI advised banks not to give loans for purchase of gold in any form, including primary gold, bullion and jewellery. Still, RBI held that banks can provide finance for genuine working capital needs of jewelers. Objective: To discourage people from indulging in speculative activity. Such advances by the banks are probable to be utilized for purposes of financing gold purchase at auctions or speculative holding of stocks and bullion. This decision by RBI was made in view of significant increase in imports of gold in recent years which has put pressure on CAD (Current Account Deficit). RBIs Monetary Policy Statement of April 2012 declared the establishment of a Working Group to analyze issues concerning to gold imports and gold loans by Non-Banking Financial Companies (NBFCs) in India. The Working Group, submitted its draft report in August 2012, proposed that other than working capital finance, banks should not be allowed to finance purchase of gold in any other form. White Goods makers miss targets despite good demand What are White Goods ?
November 21st, 2012

What are White Goods or Whiteware ? What are White Sales? White Goods or Whiteware basically refer to two groups of household items: Household linens Household appliances Household linens Household linens like Handkerchief, bed sheet, towel, pillow, etc. These were originally were/are made of white cotton or linen fabric, thus were referred to as White Goods. Household appliances Household appliances such as the Washing machine, Air conditioner, Microwave oven and Refrigerator, etc. These products were/are often factory-finished in white enamel and thus were referred to as White Goods. Now, they are available in other colors but still they are known as White Goods or Whiteware. White Sales

Sales of household linen in a departmental store where inventory of white goods such as sheets, towels, bedspreads, pillowcases and other linens on sale. What are Brown Goods?

Brown Goods are Electronic domestic appliances like TV, radio, video recorders, etc. Since they were were traditionally finished in brown due to their wooden or Bakelite make, they were known as Brown Goods. Difference b/w White Goods and Brown Goods:

White Goods are relatively high-priced, heavy, and slow-moving electronic goods whereas Brown goods are relatively light and low -priced and fast-moving electronic goods. In general, high-end technical skills are required to repair the complex electronics circuits based brown goods, whereas practical application specialized knowledge is needed in servicing the white goods. Moodys strips France of AAA credit rating
November 21st, 2012

Moodys Investors Service stripped Europes No. 2 economy France of it of its AAA credit rating. Moodys moved France from AAA to AA1 rating. The reasons given by Moodys for this actions: Frances persistent structural economic challenges Sustained loss of competitiveness in France due to rigidities in labour and services markets, and low levels of innovation Intel CEO Paul Otellini to retire November 21st, 2012 Intel CEO Paul Otellini Otellini who has worked with Intel for nearly 40 years and became CEO in 2005. Otellini will retire in May at the age of 62 years. Intel held that search it is searching for replacement for Otellini both within and outside the organization. Govt Allows LICs investment cap in firms to 30%
November 23rd, 2012

The Finance Ministry has relaxed the investment norm for Life Insurance Corporation of India. LIC can now invest up to 30% of a companys paid-up capital. Earlier it could invest up to 10%. Objective: This can be seen as an effort to meet the disinvestment target of Rs 30,000 crore this fiscal. LIC on March, 1, 2012 had bailed out the governments disinvestment process by picking up ONGC shares. Thus, the fresh norms will enable the cash-rich LIC,

which invests around Rs 50,000-60,000 crore in equity yearly, to pick up higher equity in state-owned companies during the disinvestment process. The government aims to sell equity in various state-owned companies like Nalco, Hindustan Copper, SAIL, BHEL, MMTC and Oil India Limited (OIL). Govt also aims to sell its remainder equity in companies which were privatized earlier. Before the ONGC disinvestment, the government had collected a merely Rs 1,145 crore (mostly from the sale of shares in Power Finance Corp) against a target of Rs 40,000 crore. That has been increased by about Rs 12,600 crore via the sale of 5% of ONGC in an auction that scraped through thanks to a last-minute intervention by the LIC.

The insurance regulator IRDA was against LIC picking up more than 10% equity in a company. It wanted LIC to stick to the norms applicable to private insurers. However, the investment norms for LIC are mandated by the Finance Ministry and NOT IRDA. There is however, no change in the investment norms of other governmentowned companies. GAAR amendments finalized: Chidambaram November 23rd, 2012 Finance Minister P.Chidambaram held that the amendments to General AntiAvoidance Rules (GAAR), have been finalized. GAAR, was proposed in the 2012-13 Budget in order to preventing tax evasion. But it aroused sharp reactions from foreign as well as domestic investors who feared that unchecked powers to taxmen would result in harassment of the investors. Thus, the government subsequently appointed a committee headed by tax expert Parthasarthi Shome to look into their matter SEBI eases Mutual Fund exposure limit for HFCs
November 23rd, 2012

SEBI eased the the investment limit for HFCs (Housing Finance Companies) in debt mutual funds. An additional exposure not exceeding 10% of net assets of the scheme shall be allowed only to HFCs as part of financial services sector for prudential limits in debt oriented schemes. The relaxation would be subject to certain conditions such as: The securities issued by HFCs are rated AA or above The HFCs should have been registered with the National Housing Bank (NHB) The total investment in HFCs shall not exceed 30% of the net assets of the scheme TDSAT reserves order on Tata Teleservices-Vodafone dispute on SMS fee November 23rd, 2012 Tata Tele took Vodafone to Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against Vodafones notice threatening to disconnect termination of SMSes on its network over a dispute on certain fees. A single-member Telecom Disputes Settlement and Appellate Tribunal (TDSAT) bench of P.K.Rastogi reserved its order on the interim plea of Tata Teleservices. Establishment: TDSAT:

The Central Govt has established an Appellate Tribunal known as "Telecom Disputes Settlement & Appellate Tribunal (TDSAT) under Section 14 of TRAI Act, 1997 as amended by TRAI Amendment, 2000 to settle and adjucate disputes and dispose off appeals relating totelecommunication, broadcasting and cable services. Functions: The functions of the appellate tribunal are to adjudicate any dispute between a licensor and licensee, between two or more service providers, between a service provider and a group of consumers, and to hear and dispose of appeals against any decision or order of TRAI, the appellate tribunal consists of Chairperson and two Members. Airtel Completes Largest Network Transformation in African Telecoms History
November 23rd, 2012

Bharti Airtel Ltd, Indias largest telecommunications operator has finished an endto-end network transformation program across the 16 African countries in which it operates. This transformation programme by Airtel follows the 2011 declaration of an ongoing 5 year multi-country managed services arrangement, in which Ericsson would manage and optimize Airtels mobile networks across Africa. The project will result in Airtel Africas 60 million plus user to have an improved experience on their network.

Usain Bolt, Allyson Felix : IAAF world athletes of the year

November 27th, 2012

Jamaican runner Usain Bolt was declared the winner of theIAAF World Athlete of the Year award for 2012 for the 4thtime. US sprinter Allyson Felix bagged the womens World Athlete of the Year award. Hurdler Aries Merritt of US clinched Inspiration Award David Rudisha, runner from Kenya, won the Performance of the Year award Keshorn Walcott, Javelin thrower of Trinidad and Anthonique Strachan sprinter of Bahamas won the Rising Star awards Gavaskar honored with CK Nayudu Lifetime Achievement award
November 27th, 2012

BCCI honored former India captain and legendary opener Sunil esteemed Col CK Nayudu Lifetime Achievement award. Other Awards:

Gavaskarwith

Polly Umrigar Award: Virat Kohli 100 internatonal centuries: Sachin Tendulkar Lala Amarnath award (Best all-rounder in the Ranji Trophy): Stuart Binny Best all-rounder Limited overs: Laxmi Ratan Shukla Madhavrao Scindia Trophy (Highest Run getter in ranji Trophy): Robin Bist Highest wicket-taker in the Ranji trophy: Ashoke Dinda MA Chidambaram trophy, Best U-16 cricketer of 2011-12:Mohd Saif MA Chidambaram trophy, Best under-19 cricketer: Vijay Zol MA Chidambaram trophy, Best under-22 cricketer: Satyam Choudhary

MA Chidambaram trophy, Best woman cricketer (Sr):Anagha Deshpande Best umpire in domestic cricket: S Ravi Definition of Infrastructure Lending revised by RBI
November 26th, 2012

RBI has revised the definition of infrastructure lending. The revised definition, would make sectors and sub-sectors eligible for infrastructure lending by banks and financial institutions with immediate effect. RBI has been decided to harmonize the definition of infrastructure lending for the purpose of financing of infrastructure by the banks and Financial Institutions with that of the Master List of Infrastructure sub-sectors notified by the Government of India on March 27, 2012. The exposure of banks to projects under sub-sectors which were included under previous definition of infrastructure, but not included under the revised definition, continue to get the benefits under infrastructure lending for such exposures till completion of the projects. However, any fresh lending to those sub-sectors from date of this circular will not qualify as infrastructure lending. List of sub-sectors for Infrastructure Lending A credit facility extended by lenders (i.e. banks and select AIFIs) to a borrower for exposure in the following infrastructure sub-sectors will qualify as infrastructure lending: our will the the

Source: RBI

1. Includes supporting terminal infrastructure such as loading/unloading terminals, stations and buildings 2. Includes strategic storage of crude oil 3. Includes city gas distribution network 4. Includes optic fibre/cable networks which provide broadband / internet 5. Includes Medical Colleges, Para Medical Training Institutes and Diagnostics Centres 6. Includes cold room facility for farm level pre-cooling, for preservation or storage of agriculture and allied produce, marine products and meat. CCEA clears 9.5% stake sale in NTPC
November 26th, 2012

The Cabinet Committee on Economic Affairs (CCEA) has approveddisinvestment of 9.50% equity in NTPC, out of its holding of 84.50% via an offer for sale of shares via stock exchanges as per SEBI Rules and Regulations. Govt hopes to fetch Rs.13,000 crore via this equity divestment. Post-disinvestment, the governments stake in NTPC will come down to 75% and this will assist NTPC in complying the minimum public shareholding norms.

NTPC is a listed Maharatna public sector undertaking (PSU) engaged in power generation. NTPC became public with its initial public offering hitting the market in 2004. In 2009, the government further diluted its stake in the company through Follow-on Public Offer (FPO). UP announces Rs 1,650 crore loan waiver to farmers
November 26th, 2012

The Uttar Pradesh Chief Minister Akhilesh Yadav announced an agricultural loan waiver worth Rs 1,650 crore. Likely to benefit about 7.2 lakh small and marginal farmers. Would apply to farmers who had taken up to Rs 50,000 of loan from the UP Sahkari Gram Vikas Bank (UPSGVB) against farm land as collateral. The rider is that the borrower should have repaid at least a tenth of the principal amount by March 31, to be eligible. The waiver will include both the unpaid principal and interest. ECB window to widen
November 29th, 2012

ECB: External Commercial Borrowing The government is all set to widen the scope of ECB. This will be done via including sectors incorporated in the new definition of infrastructure, approved by the Cabinet committee on infrastructure. Objective: This will permit companies involved in various sectors, including education and health, gain an access ECB in order to raise debt. A high-level committee on ECB, chaired by Economic Affairs Secretary Arvind Mayaram will meet on November 30, 2012 in order to clear the proposal, after which the RBI would issue the opt notice. Liquid Index ETFs shall be eligible for trading in the SLB segment: SEBI
November 29th, 2012

As part of changes in the securities lending and borrowing framework, SEBI has permitted ETFs (Exchange Traded Funds) that track indices to trade in the short selling market. Liquid Index ETFs shall be eligible for trading in the Securities Lending and Borrowing (SLB) segment. SEBI has also said that an Index ETF would be considered liquid, if: The Index ETF has traded on at least 80% of the days over the past 6 months. Index ETFs impact cost over the past 6 months is less than or equal to 1%. SEBI has also introduced roll-over facility for lenders and borrowers in the SLB segment This concerns with the short selling in the market. In general, short selling pertains to selling of a stock that is not owned by the seller at the trading time. The short selling can be done by retail and institutional investors.

As per SEBI, any lender or borrower who wants to extend an existing lent or borrow position shall be permitted to roll-over such positions. Thus, now a lender who is due to receive securities in the pay out of an SLB session can extend the period of lending. Likewise, a borrower can extend the period of borrowing. The roll-over shall be conducted as part of the SLB session. Rollover would not be permitted for netting of counter positions. Rollover shall be available for a period of three months i.e. the original contract plus two rollover contracts. Sebi has asked stock exchanges to take necessary steps for implementing the circular. Jet Airways may get approval to join Star Alliance
November 27th, 2012

Jet Airways may get nod from Civil Aviation to join the Star Alliance with state-owned Air India. What is Star Alliance? Star Alliance is the worlds first and largest global airline alliance, headquartered in Frankfurt am Main, Germany. It was founded in 1997 by five founding airlines, Air Canada, Lufthansa, Scandinavian Airlines, Thai Airways International, and United Airlines. Star Alliance has since expanded and now has 28 member airlines with more than 21,100 daily departures combined. These flights reach 1,356 airports in 193 countries, with an annual passenger number of 678.5 million. Hind Copper disinvestment rescued by LIC and PSU banks
November 27th, 2012

In the direction of achieving Rs 30,000 crore target for fiscal 2012-13 by disinvesting PSUs, the government of India managed to yield Rs 800 crore by selling shares of Hindustan Copper. The sail was mainly on support from the Life Insurance Corporation and public sector banks. The offer for sale (OFS) saw lukewarm response from large foreign institutional investors and private domestic investors like mutual funds. Pepsi replaces DLF by winning 5 years sponsorship of the IPL
November 27th, 2012

Pepsi won the five-year title sponsorship of the Indian Premier League (IPL). It replaced earlier sponsor DLF by paying Rs 396.8 crore ($71.93 million) which is almost double the amount DLF paid. Aapka Paisa, Aapke Haath
December 2nd, 2012

Slogan for the Direct Cash Transfer scheme from Govt: Aapka Paisa, Aapke Haath (your money in your hands) Direct Cash Transfer to beneficiaries of various welfare schemes by Govt. Objective: To remove the middlemen from the system

To check leakages from the system Elimination of falsification and duplication with regard to subsidies Give power of choice to beneficiaries, especially BPL No delay in transfer of money to beneficiaries Beneficiaries can access it themselves or via bankingcorrespondents who are being set up in all the areas As per Finance Minister, P.Chidambaram, it costs the government Rs 3 to transfer 1 rupee to the pockets of beneficiaries. The rest goes on administrative expenses, waste and corruption. Cash transfers will do away with mediators of all sorts, thus reducing corruption and administrative burdens. At present, beneficiaries have to furnish various paperwork for availing benefit. CTS has the potential to merge all paperwork, thus reducing red tape and improving efficiency. Modus operandi of the scheme:

Banks would be the distribution point for cash subsidy initially Subsidies would directly be electronically transferred to the bank accounts of the beneficiaries The electronic cash transfers will be based on Aadhaar platform Stages planned:

By January 1, 2013, 51 districts with high Aadhar penetration will be covered. By December 2013, the entire nation will be covered What are the challenges before Govt? Since, the government is basing the entire exercise on banks and using technology transfer to directly benefit the people using Aadhaar platform. But the issues are:

Most BPL families dont have bank accounts Several villages dont even have bank branches At present, only about 10% of population has Aadhar cards Politically difficult to withdraw benefits from once-poor folk who become better off. Trump Card for Congress?

NAREGA and waiving off farmers loans proved trump cards for Congress in the last election, this time the directly giving beneficiaries cash in their very own accounts may prove as Trump Card for Congress before next elections Union Finance Minister P.Chidambaram called this scheme as a game changer BSE Carbonex- Indias first carbon-based thematic index launched December 2nd, 2012 The Bombay Stock Exchange (BSE) launched, countrys first carbon based thematic index, BSE Carbonex, which will provide a strategic perspective of organizational commitment to climate change mitigation. What is the aim of BSE Carbonex? This index is introduced with an aim providing a benchmark, and increasing awareness about the dangers posed by climate change. It will enable investors to gauge the performance of the constituent companies of BSE-100 index regarding

their commitment to greenhouse gases emission reduction. Constituents of BSE Carbonex are over or underweighted compared to the benchmark based on their performance in the assessment process. The assessment will be based on the carbon emission and carbon efficiency of companies. The index will encourage people to invest in companies performing well on the index thus promoting low carbon growth. The Index has been developed with the help of expertise from U.K. Enforcement Directorate sent 220 FEMA Notices in past 3 Years
December 2nd, 2012

Enforcement Directorate (ED) sent 220 show cause notices under Foreign Exchange Management Act (FEMA) in past 3 years. These notices were issued in context with the illegal funds transfer in Indiathrough illegal channel. The ED did not register the cases related with illegal money transfer from external sources in respect to the state government. Foreign Exchange Management Act (FEMA): Passed in 1999 Objective: To replace FERA (Foreign Exchange Regulations Act), 1973 which had become incompatible after economic reforms and pro-liberalization policies of the Government of India. Seeks to make offenses related to foreign exchange civil offenses. Allows only the authorized people to deal with foreign security or foreign exchange. The NH-4 Bank plans to become pan-India player
December 1st, 2012

Which Bank in India is often referred to as the NH-4 Bank ? The Ratnakar Bank is often referred to as the NH4 Bank in thebanking circles, . Reason: As majority of the business of Ratnakar Bank comes from cities in and around the 1,235-km-long National Highway-4 (NH-4) that connects four of the 10 most populous cities in India. The Kolhapur based private bank will keep serving the local community of traders, small businessmen and farmers while it now aims to become a pan-India player. 19 RRBs merged into 8; now 71 left
December 1st, 2012

The government has merged 19 Regional Rural Banks (RRBs) into 8 entities. All this happened in spite of reservations by RBI. The Govt plans to merge more RRBs this financial year. RBI was not happy with this decision as the Finance Ministry didnt took RBI into loop while making this decision. At present the numbers are as follows: RRBs = 71 PSBs = 26

Etihad Airways in talks to buy Jet Airways

December 5th, 2012

Abu Dhabi-based Etihad Airways is in talks with Indian carrier Jet Airways for the possible buyout of the latter. Etihad Airways is looking expand its global presence and is competing with its neighbors fast expanding global airline Qatar Airways and the Dubai-based Emirates. Etihad has acquired or raised its stake ininternational airlines such as Virgin Australia, Germanys Air Berlin, AirSeychelles, Irelands Aer Lingus. Etihad may buy 24% stake in Jet Airways for Rs 1,600 crore. PVR to buy 69% stake in Cinemax
December 3rd, 2012

PVR would acquire 69.3% stake in Cinemax India for an amount of Rs 395 crore in order to expand its business in India. Cinemax is owned by Kanakia Group. The acquisition would make PVR the largest multiplex chain in India. PVR: Priya Village Roadshow (PVR) Cinemas Began as a joint venture agreement b/w Priya Exhibitors Private Limited and Village Roadshow Limited in 1995 with 60:40 ratio Commenced its commercial operations in June 1997 with the launch of PVR Anupam in Saket PVR Anupam in Saket, South Delhi, was Indias first multiplex Introduced the multiplex concept in India Infosys to shift its ADS from Nasdaq to NYSE Euronext
December 2nd, 2012

Indian IT major Infosys will shift its American Depositary Shares (ADS) from the NASDAQ to NYSE Euronext. The step is being taken to provide European investors better access to its stock. What is ADS? It refers to US dollar denominated share of any foreign company trading on an American stock exchange. Why Infosys has chosen NYSE Euronext? NYSE Euronexts equities markets represent nearly 40% of the worlds equities trading and are considered the most liquid of any global exchange group. Its tie-ups with exchanges in Europe will allow Infosys to expand its market base by making its stock more visible and accessible to investors in countries such as Germany and France. Corporate frauds on rise in India- Survey
December 5th, 2012

As per the findings of India Fraud Survey Report 2012 published by KPMG, around 75% surveyed corporate in India believed that the incidences of fraud were increasing. As per the report: Decline of ethical values, weaker internal control system, reluctant managers for taking the decisive action were major reasons. Mistake of senior management tasks by the audit committees, weak regulatory mechanisms major concern. Sales, distribution and procurement are most susceptible areas of fraud. Competition to surpass market expectations was the primary reason behind financial fraud Fraud in financial statement was a primary concern Absence of recognized fraud risk management system In coming years, Computer-related and e-commerce frauds would become major concerns, Around 75% frauds were committed by the employees The important findings of the Survey are as follows: 63% say the desire to exceed market expectations is the main reason to commit financial fraud 81% say financial statement fraud is a major issue 41% say they do not have a formal fraud risk management framework e-commerce & computer-related fraud to be a source of major concern in the coming years 75% all fraudulent activities, except Intellectual Property (IP) fraud were perpetrated by employees EPFO unveiled e-Passbook service December 5th, 2012 Employees Provident Fund Organization (EPFO) launched its e-Passbook service which will enable its subscribers to access their accounts online. Active Subscribers will now be able to get their e-passbook every month. Subscribers can log on to www.epfindia.gov.in to register and download their passbook. However, members under exempted establishments under the EPF Scheme 1952 (as the fund details are maintained by the Trust) and inoperative members (i.e. in accounts where no contribution has been received in the preceding 36 months) cant avail the facility. Cheque books only in new format will be valid from January 1, 2012
December 5th, 2012

Old cheque books will be of no use from January 1, 2013 with the implementation of Cheque Truncation System (CTS-2010). Only new cheques with more security and standardized features will be acceptable. How it will help? The new cheques will obviate the need of physical movement of cheques for clearing. This will be possible just by electronic images of the cheque through which key information will be captured and transmitted. It will make the clearing process more efficient, secure and quicker.

What changes have been made in new cheques? The features which are new: Bank logo printed with invisible ink (ultra voilet) VOID pantograph Chequer printer details/CTS-2010 New Rupee symbol Signature space indicator Government to pour in Rs 4,000-cr capital into SBI
December 7th, 2012

In order to boost the strength of countrys largest bank, SBI, government is expected to infuse Rs 4,000 in the bank. This will enhance banks Capital Adequacy Ratio (CAR) to over 13%. What is CAR? CAR is a key indicator of a banks financial strength expressed as a ratio of capital to risk-weighted assets. What is the need for capital infusion in banks? The capital infusion is necessary to boost up the core capital base of the state-run lenders hit by bad loans and poor asset growth. Ranjit Sinha becomes CBI Director
December 7th, 2012

Ranjit Sinha, senior IPS officer from 1974-batch Bihar cadre, has taken the charge as the new CBI Director. ife insurers not allowed to participate in repo transactions: IRDA
December 7th, 2012

The Insurance Regulatory and Development Authority (IRDA) said that life insurance companies are not allowed to take part in repo transactions. In a circular IRDA clarified that: In case of reverse repo (lending) transactions in government securities and corporate debt securities, the exposure should not exceed 10% of all funds taken together. Even at segregated fund level, exposure should not exceed 10% of the fund size. For non-life insurers, the exposure to reverse repo and repo transactions in government securities and corporate debt securities should not exceed 10% of investment assets of the insurer. The tenure of repo transactions shall not exceed a period of six months. All companies would have to take prior sanction from investment committee before participating in repo transactions. The underlying debt security would have to be listed and have a minimum rating of AA or equivalent

Reverse repo and repo transactions in corporate debt securities would not be allowed b/w insurer and its promoter group entities In terms of matters like accounting methodology and reporting of trades for reverse repo and repo transactions, companies would have to follow the January 2010 directions of RBI. Rs. 2,490 cr: Tax-exempted income of parties in 5 years December 7th, 2012 In the last 5 years the tax-exempted income of the 10 main political parties has reached Rs. 2,490 crore. Section 13A of IT Act 1961 exempts political parties from tax on their income. However, they have to maintain a book of account for donations or income above Rs. 20,000. Nokia to sell its Finland head office building
December 11th, 2012

Nokia will sell its headquarter building in Espoo, Finland for $222 million as part of a drive to sell assets. Finnish real estate company Exilion will buy the building located by Baltic Sea. Nokia will lease it back on a "long-term basis". The company is also in trouble as it recently recorded its sixth consecutive quarterly loss as it proceeds with a vast restructuring programme. Citigroup to slash 11,000 jobs
December 10th, 2012

With an aim to cut expenses and make the bank more manageable Citigroup Inc is cutting 11,000 jobs or 4% of its workforce globally. The cuts are expected to bring at least $1.1 billion in annual savings starting in 2014. Citigroup is slashing jobs since 2007 when it announced 96,500 job cuts from 2007 to 2011. The will also shrink its global presence as it will shut down 84 branches in five countries, more than half of them in the United States. After the restructuring, the bank will have 4,000 branches around the world. India ranked 94th in corruption perception list
December 10th, 2012

Transparency International has ranked India at 94th place in itsCorruption Perception Index 2012 (CPI) which enlisted 176 countries. India scored 36 on a scale from 0 (most corrupt) to 100 (least corrupt). The low score of India is attributed to the recent scams and incidents of corruption in the public sector involving government officials, private officials and private companies. Denmark, Finland and Switzerland topped the index with a score of 90 followed by Sweden with a score of 88. Afghanistan, North Korea and Somalia scored just 8 to be ranked lowest on the index. India stood below Sri Lanka Iran,Nepal, Pakistan and Bangladesh. and China, while it ranked better than

From 2012, the CPI methodology has been updated to provide for year-over-year comparisons. RBI sets up supervisory colleges for SBI, ICICI
December 8th, 2012

The RBI has for the first time established the Supervisory College for cross border supervision of State Bank of India(SBI) and ICICI Bank. What is the role of Supervisory College? The main role of the supervisory college, comprising local andinternational regulators, is to keep lenders aware of the latestglobal regulations and to evaluate their worthiness for global operations. This concept was suggested by Basel Committee for Banking Supervision (BCBS) October 2010. Supervisory college will help in reducing supervisory overlap and filling in supervisory voids for better supervisory co-operation articulated in Basel-2 framework. Why only for these two banks? SBI is the largest bank in the country with maximum foreign officers among Indian banks. ICICI Bank is the largest private sector bank, which also have a considerable presence overseas. Who are the supervisors for these banks? SBI to have 9 host country supervisors which are: Bangladesh Bank, Central Bank of Bahrain, National Bank ofBelgium, Dubai Financial Services Authority, Financial Services Authority (London), Federal Financial Services Authority (BaFin), Bank of Mauritius, Nepal Rastra Bank, and Monetary Authority ofSingapore. ICICI Bank to have 7 host country supervisors which are: Central Bank of Bahrain, National Bank of Belgium, Dubai Financial Services Authority, Financial Services Authority (London), BaFin, Bank of Russia and Monetary Authority of Singapore. RBIs inflation comfort zone need not be changed: Rangarajan
December 8th, 2012

Prime Ministers Economic Advisory Council (PMEAC) C. Rangarajan pined not to alter the RBIs inflation comfort level from 4-5%. In 1998, Rangarajan had considered inflation rate at 6% to 7% as acceptable level. At that time, inflation level was as high as 10% to 11%. High inflation caused problems on the exchange rate side, and it was desirable to control inflation to 4-5% which was considered as comfort zone by RBI. RBI is not reversing its monetary policy position on the back of

inflationary expectations. It has asked the Centre to take steps to slash rising fiscal deficit. The rupee has depreciated considerably against the dollar in the last one-and-ahalf years. In 2011, the exchange rate was Rs 48 per dollar. Currently it has depreciated to Rs 55 per dollar. The economic growth has declined to 5.3% in the second quarter, and growth for the entire financial year has plummeted to a 10-year low. During October, consumer price index-based inflation rate in the US stood at 2.2%, against 9.75% in India. Why some experts believe inflation comfort zone should be changed? Some experts believe that in present conditions where fuel price has been increased, minimum support price being increased every year, and supply constraints, inflation normal cannot be four-five per cent. They think that, in a country like India, where a large part of agriculture is monsoon dependent, inflation can only be reduced in a phased manner in the medium-to long-run, from 6-7% to 5% and then to 4% since targeting 4-5% inflating in short run would be difficult. WHO instructs India to keep lens on tourist for SARS-like virus
December 13th, 2012

As instructed by the WHO, India is keeping a closewatch on incoming tourists, fearing transmission of a new respiratory virus that belongs to the same family as the deadly Severe Acute Respiratory Syndrome (SARS). The WHO has instructed member countries, under the internationalhealth regulations, against screening this virus at point of entry. The deadline was originally till the end of 2012, which has been extended by a year. The organization encourages all member states to continue their surveillance for Severe Acute Respiratory Infections (SARI) and is currently reviewing the case definition and other guidance related to the novel SARS-coronavirus. India has 25 airports, 12 ports and 7 international land borders catering to international traffic. These can be possible points through which dangerous pathogens can be brought by international passengers. Health units, however, exist only at 21 points most of which were established way back in 1950. The 12th Five Year Plan seeks to establish health surveillance units, isolation wards and quarantine facilities in 23 additional airports, ports and land borders. What is SARS? Severe Acute Respiratory Syndrome (SARS) A serious form of pneumonia caused by a member of the coronavirus family of viruses (the same family that can cause the common cold), so it is also called SARS-CoV. It infects both humans and animals (livestock, birds, etc.). It had spread like a pandemic in Hong Kong in March 2003, and from there it transmitted to several other countries. SARS is a dramatic example of how quickly world travel can spread a disease.

How SARS spreads? When someone with SARS coughs or sneezes, infected droplets spray into the air. One can catch the SARS virus if you breathe in or touch these particles. The SARS virus may live on hands, tissues, and other surfaces for up to 6 hours in these droplets and up to 3 hours after the droplets have dried. Live virus has even been found in the stool of people with SARS, where it has been shown to live for up to 4 days. The virus may be able to live for months or years when the temperature is below freezing. Symptoms: It includes flu-like symptoms such as fever, muscle pain, headaches, diarrhea, sore throat, runny nose, malaise, and myalgia (muscle pain), dry cough, shortness of breath, and an upper respiratory tract infection. People with active symptoms of illness are contagious. Treatment: There is no cure or preventive vaccine available currently. The treatment is only supportive. Antibiotics are ineffective, as SARS is a viral disease. If a person is suspected of having SARS, they should be kept isolated in the hospital. Prevention: o Reducing contact with people who have SARS Hand hygiene is the most important, thus Wash hands or clean them with an alcoholbased instant hand sanitizer. Avoid travel to places where there is an uncontrolled SARS outbreak. Do not share food, drink, or utensils. Walmart spent $25 million in lobbying to enter Indian retail market
December 13th, 2012

Global retail major Walmart has reported in its disclosure that it has spent close to USD 25 million (aboutRs.125 crore) since 2008 on its various lobbying activities, including on the issues related to "enhanced market access for investment in India". The disclosure has come at a time when India has just opened up its multi-brand retail sector for foreign companies after the government won the vote over the FDI policy in retail, in both houses of parliament. Walmart stores has been waiting for a long time to enter the expanding retail sector in India which is currently of the size of about USD 500 billion and is pegged to cross USD one trillion mark by 2020. The sector is also lucrative as it promises growth of 15-20%over the next 5 years.

In US, the companies are allowed to lobby for their cases in various departments and agencies in the country, but they are required to file their lobbying disclosure reports every quarter with the US Senate. What is Walmart? Wal-Mart Stores, Inc. branded as Walmart US multinational retailer corporation Runs chains of large discount department stores and warehouse stores. Worlds third largest public corporation Biggest private employer in the world with over 2 million employees Largest retailer in the world Family-owned business (as the company is controlled by the Walton family who own a 48% stake in Walmart) S. Robson Walton (Chairman) 8,500 stores in 15 countries, under 55 different names Walmarts investments outside North America have had mixed results: its operations in the UK, South America and China are highly successful, whereas ventures inGermany and South Korea were unsuccessful. Apple joins hands with Google to bid for over $500 million Kodak patents
December 13th, 2012

Apple Inc. and Google Inc. came together to offer more than $500 million to buy Eastman Kodak Co. (EKDKQ)s patents out of bankruptcy. Why Apple and Google came together despite being competitors? Despite being competitors in the smartphone market, the two companies have joined hands in order to reduce the individual cost of purchasing the Kodak patents, while fulfilling theirbusiness requirements. These kinds of partnerships in patent sales are very typical because they allow competitors to neutralize potential infringement litigation. Companies in Apple-led group: Microsoft and Intellectual Ventures Management LLC Companies in Google-led group: RPX Corp. and Asian makers of Googles Android phones. The two groups had separately offered less than $500 million for Kodaks portfolio. Why Kodak is its selling patents? Kodak which sought protection under Chapter 11, is selling patents to fund a turnaround. It is also following a plan to shrink the company and focus less on photography and more on commercial, packaging and functional printing and enterprise services. The company showed $5.1 billion in assets and $6.75 billion in debt in its bankruptcy filing. It plans to exit bankruptcy in the first half of 2013. Golden Cards for industrialists in Uttar Pradesh

December 11th, 2012

The Uttar Pradesh govt will issue Golden Card to to industrialists andindustrial associations for easy access to its offices. What is a Golden Card? A Golden Card will be like an identity (ID) card with the holders photo. It will allow entry of industrialists to the state secretariat and government departments on priority basis without hurdles. The right to visit card will be treated at par with ID cards issued by the secretariat. To whom these cards will be issued? The cards will be issued to national presidents, state presidents and general secretaries of national-level industrial associations such as the Confederation of Indian Industries (CII), PHD Chamber of Commerce & Industry (PHDCCI), Indian Industries Association (IIA), Associated Chamber of Commerce and Industry (Assocham) and Federation of Indian Chambers of Commerce and Industry (FICCI). Esteemed investors, who intend to invest more than Rs.200 crore in Uttar Pradesh, will also be issued the cards. Promoters of such projects or their nominated representative will be able to access this facility. A maximum of two cards will be allowed per association while state-level industrial associations will be allowed one card each. Cyber Monday: Google India collaborates with e-Commerce companies to bring in Cyber Monday
December 11th, 2012

India will celebrate Great Online Shopping Festival where shoppers, via online shopping, will be offered best deals from e-Commerce, local & classified, online travel sites and BFSI industry. The concept, which is being brought here by Google India with other eCommerce companies, is similar to Cyber Monday which is observed in majorly in the US and several other countries including Canada, UK, Portugal, Germany, Chile, Colombia, and Japan. What is Cyber Monday? Cyber Monday is a marketing term for the Monday after Black Friday, the Friday following Thanksgiving in USA. The term "Cyber Monday" was created by marketing companies to persuade people to shop online. What is the objective of this? The main objective of organizing this event is to encourage online shopping and boost the role of e-Commerce in the country. RBI eases KYC norms, no need of of introduction from an existing customer of the bank for opening of bank accounts
December 15th, 2012

The RBI has eased the burden of producing multiple documents to open a bank account. It has said that banks can accept any of the documents such as Passport, PAN Card, Drivers Licence, Aadhaar letter, and NREGA Job Card as proof of identity as well as address. It is a condition that the address on the document submitted for identity proof should be the same as that declared in the account opening form. The RBI has also scrapped the requirement of introduction from an existing customer of the bank for opening of bank accounts since introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Banks extant KYC instructions. Why the banks have been asking for multiple documents? The banks have doing so to comply with their obligation under the Prevention of Money Laundering (PML) Act, 2002 and to fulfill Know Your Customer requirements. The RBI has also scrapped the requirement of introduction from an existing customer of the bank for opening of bank accounts since introduction is not necessary for opening of accounts under PML Act and Rules or Reserve Banks extant KYC instructions. SEBI allows 12 more AIFs
December 15th, 2012

SEBI has allowed 12 entities to establish Alternative Funds (AIFs) for real estate, private equity and hedge funds.

Investment

The 12 AIFs that have been registered with SEBI since October 10, 2012 include India Realty Fund, Dar Mentorcap Film Fund, Capaleph Indian Millennium Small & Medium Enterprises Fund and Capaleph Indian Millennium Private Equity Fund. As per the SEBI guidelines, AIFs can operate broadly in 3 categories. The SEBI rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others. Mutual funds under the SEBI (Mutual Funds) Regulation, 1996 and SEBI (Collective Investment Schemes) Regulations, 1999 are not covered under the AIF Regulations. What are AIFs? Categories of AIFs, Objectives of SEBI for allowing more AIFs, -ves / +ves about AIFs, Who are excluded from AIF Regulations, 2012? Category-I AIFs: Those funds that get incentives from the government, SEBI or other regulators and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds. Category-II AIFs: These can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. They includePE funds, debt funds or fund of funds, as also all others that are not classified as category I or III.

Category-III AIFs: Those funds that trade with a view to making short-term returns and include hedge funds, etc. which employs diverse or complex trading strategies and may employ leverage including through investment in listed or unlisted derivatives. These funds can be open ended or close ended. Objective:

SEBI aims to bring unregulated and lightly regulated investment funds like hedge funds and private equity-venture capital funds under its ambit with a view to systemic stability, increasing market efficiency, encouraging formation of new capital and consumer protection. AIFs are basically established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing as per a pre-decided policy. The regulation covers all AIFs, including PEs, real estate funds and hedge funds, and makes it mandatory for them to register with SEBI. -ves about AIFs

Many alternative investments also have high minimum investments and fee structures compared to mutual funds and ETFs. While they are subject to less regulation, they also have less opportunity to publish verifiable performance data and advertise to potential investors. +ves about AIFs Alternative investments are favored mainly because their returns have a low correlation with those of standard asset classes. Who are excluded from AIF Regulations, 2012? Followings are excluded from the ambit of AIF Regulations:

Family trust, ESOP trusts, employee welfare trusts, gratuity trusts, collective investment schemes, holding companies, securitization trusts, and any such pool of funds which is directly regulated by any other regulator in India are expressly excluded DeiTy (India) to impose its own standard for electronic products
December 15th, 2012

The Department of Electronics and Information Technology (DeiTy)has made it mandatory for all electronics goods manufacturer in the country to get standard compliant certificate from the BIS. Applicable for electronic products imported or manufactured after April 2013. Objective: To curb the grey market for sub-standard electronics products How this move would help? What are the items covered under new standards?

Under this, the DeiTy has listed 15 product categories the sellers of which are mandatorily required to obtain standard compliant certificates before selling in India. Those include laptops, tablets, LCD, LED televisions, optical disc players, microwave ovens, printers, scanners, wireless keyboards, video monitors, telephone answering machines, amplifiers, musical systems, electronic clocks and set top boxes among others. In second phase, the department plans to include mobile phones and some other electronics goods to make them follow the new standards. Lok Sabha approves Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011
December 15th, 2012

Lok Sabha approved Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011 which seeks to change the system of debt recovery. The Bill seeks to convert any part of debt of a defaulting company into shares by the asset reconstruction company. Why this amendment was essential? How the current amendment would help? In current scenario, where Non-Performing Assets (NPAs) of all nationalized banks in India stand at Rs 1.23 lakh crore which are currently equivalent to approximately 3.5 % of total loans, it was imperative on the behalf of government to ease the burden of NPAs on banks and financial institutions (FIs) which were facing numerous problems in recovery of defaulted loans on account of delays in disposal of recovery proceedings. The Government, therefore, enacted the RDBF Act (Recovery of Debts due to Banks & Financial Institutions) in 1993 and SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) in 2002 for the purpose of expeditious recovery of non-performing assets (NPAs) of the banks and FIs. Although these two acts have helped in reducing the NPAs, banks have sent certain suggestions for further strengthening of the secured creditor rights. How the current amendment would help? The Bill seeks to amend the SARFAESI Act and RDBF Act so as to strengthen the regulatory and institutional framework related to recovery of debts due to banks and financial institutions through the Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2011. It would strengthen the ability of banks to recover debts due from the borrowers, enhance the ability of the banks to extend credit to both corporate and retail borrowers, reduce the cost of funds for banks and their customers and reduce the level of non-performing assets. It would enable banks to ameliorate their operational efficiency, deploy more funds for credit disbursement to retail investors, home loan borrowers, etc. without fearing for recovery, thus bringing about equity. Further, mandatory registration of subsisting security interest (equitable mortgages) would promote innovation in credit information. Wipros Sunflower Vanaspati brand sold to Cargill India
December 15th, 2012

Cargill India, US-based food producer and marketer, acquired theSunflower Vanaspati brand from Bangalore based IT major Wipro. Wipro wanted to get out of its traditional edible oil business. The acquisition is expected to make Cargill, (that processes 4,000 tonne per day) the largest vanaspati player, with Rath,Gemini and Nature Fresh Purita brands in its portfolio. Sunflower Vanaspati is made out of edible vegetable oil and soya oil. The consumption of vanaspati oil is declining as people are choosing refined oil over it because of health concerns. Deadline for new cheque standard (CTS-2010) extended to March 31, 2013
December 19th, 2012

The RBI extended the deadline given to shift to new cheques (CTS-2010 Standard cheques), with advanced security and standardized features, to March 31, 2013. Earlier, it had set a December 31 deadline. Tata Sons appoints Cyrus Mistry as it Chairman
December 19th, 2012

Cyrus P Mistry will be the Chairman of Tata Sons from December 28 following retirement of Ratan N Tata. Ratan Tata will be conferred with the honorary title of Chairman Emeritus. Mistry has also been appointed as the Chairman ofTata Steel and Tata Chemicals. Tata Sons is the promoter of the major operating Tata companies and holds significant shareholdings in these firms. About 66% of the equity capital of Tata Sons is held by philanthropic trusts endowed by members of the Tata family. Infosys ADS begins trading on NYSE
December 18th, 2012

Infosys American Depository Shares (ADS) have begun trading on NYSE (New York Stock Exchange). Very recently, the company had shifted its shares from NASDAQ to NYSE to give its European investors better access to its stock. The company is also in the process of listing its ADS on the Paris and London exchanges of NYSE Euronext. ICICI Bank opens 101 gramin branches across six states
December 18th, 2012

Recognizing the potential of rural India and importance of financialinclusion ICICI Bank opened 101 gramin branchesacross six states namely across Maharashtra,Rajasthan, Andhra Pradesh, Gujarat, Madhya Pradesh and Tamil Naduwhich will provide basic banking services such as savings bank account, fixed and recurring deposit, remittances, credit cards and tractor loans. They will also service business correspondents.

The bank is assisting in electronic benefit transfers for disbursement of wages to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) workers and the Social Security Pension beneficiaries. Saral Money Prepaid Card It also launched the Saral Money Prepaid Card along with theUnique Identification Authority of India (UIDAI). The card can be used to deposit or withdraw money from various customer service points using finger print authentication. It will facilitate financial transactions without a bank account and will also be used to receive government subsidies and benefits. Sudeep Sen, first Indian to address Nobel Laureate Week
December 15th, 2012

Poet Sudeep Sen from Delhi has been invited as a special guest toaddress the Nobel Laureate Week being held in Saint Lucia, a sovereign island country in the eastern Caribbean Sea. Mr. Sen is the first Indian to be given the honor. Saint Lucia is home to Nobel Laureate and noted playwright Derek Walcott. Why Nobel Laureate Week Lucia? Who is Sudeep Sen? is celebrated? What is special about Saint

The Nobel Laureate Week starts from January 23, the birthday ofDerek Walcott and Arthur Lewis, every year to honor the Nobel Laureates who belong to Saint Lucia. What is special about Saint Lucia? The country claims to have largest number of per capita Nobel Laureates than any other country. Mr. Walcott won the Nobel Prizein Literature in 1992, while Arthur Lewis won the Nobel Prize in Economics in 1979. Who is Sudeep Sen? An alumnus of Delhi University has an MS from the Journalism School of Columbia University, New York. Received several awards and fellowships. His poems have been translated into 25 languages and have featured in international anthologies from Penguin, HarperCollins, Bloomsbury, Routledge, Norton, Knopf, Everyman, Random House, Macmillan, and Granta. Books authored by him: The Lunar Visitations, Dalis Twisted Hands, Postmarked India: New and Selected Poems. Norman Woodland, co-inventor of bar code, passed away December 22nd, 2012

Norman Woodland (91), co-inventor of the bar code, passed way. What is Barcode? A barcode is an optical machine-readable representation of data relating to the object to which it is attached. Initially barcodes systematically represented data by varying the widths and spacings of parallel lines, and may be referred to as linear or one-dimensional (1D). Later they evolved into rectangles, dots, hexagons and other geometric patterns in two dimensions (2D). Barcodes originally were scanned by special optical scanners called barcode readers; later, scanners and interpretive software became available on devices including desktop printers andsmartphones. They are widely used in supermarket checkout system, consumer products, speeds passengers through airline gates, tracks mail, encodes medical patient information, and is in near universal use across transportation, industrial and shipping industries worldwide. The very first scanning of the now omnipresent Universal Product Code (UPC) barcode was carried out in 1974.

SEBI increases BMC deposit for stock brokers

December 22nd, 2012

Market regulator, the Securities and Exchange Board of India (SEBI), has increased the Basic Minimum Capital (BMC) deposit for stock broker and trading members to up to Rs.50 lakh from the earlier maximum of Rs.10 lakh. Various BMC fixed by SEBI: Rs.10 lakh for only proprietary trading without algorithmic trading (Algo) Rs.15 lakh for trading only on behalf of client (without proprietary trading) and without Algo Rs.25 lakh for proprietary trading and trading on behalf of client without Algo Rs.50 lakh for all trading members and brokers with Algo. All stock brokers and trading members of exchanges having nation-wide trading terminals will be liable to this rule. For those not having nation-wide trading terminals, it would be 40% of the prescribed BMC deposit requirements. Exchanges will not grant any exposure against the BMC deposit. Minimum 50% of the deposit shall be in the form of cash and cash equivalents. India clinches World Cup Kabaddi Tournament 2012 in both Mens and Womens category
December 22nd, 2012

India clinched World Cup Kabaddi Tournament 2012 in both Mens and Womens category. It was a 3rdconsecutive victory of the title in the Mens category and 2nd consecutive time in the Womens category. Indian men thwarted arch rival Pakistan, while Indian women defeated Malaysia.
Tags: 2012 Banking December 2012 IBPS Sports

RBI disallows banks to issue offline debit cards, tighten norms

December 20th, 2012

The Reserve Bank of India (RBI) in its recent directives told the banksnot to allow offline debit cards. As per the recent directives banks have been told to: Issue debit cards if demanded to customers having Savings Bank and Current Accounts but not to cash credit or loan account holders. Issue only online debit cards, including co-branded debit cards where there is an immediate debit to the customers account, and where straight through processing is involved. Banks, henceforth, are not allowed to issue offline-debit cards. Discontinue such operations within a period of six months. Provide cardholders contractual terms and conditions in written form, regarding the issue and use of such cards. Specify that banks will be responsible for direct losses incurred by a cardholder due to a system malfunction directly within the banks control. Banks would not be responsible for any loss caused by a technical breakdown of the payment system if the breakdown of the system was recognizable for the cardholder by a message on the display of the device or otherwise known. The responsibility of the bank for the nonexecution or defective execution of the transaction is limited to the principal sum and the loss of interest subject to the provisions of the law governing the terms. Curtail the misuse of lost/stolen cards by issuing issue cards with photographs of the cardholder or any other advanced methods that may evolve from time to time. Undertake review of their operations/issue of debit cards on half-yearly basis. Put in place an effective mechanism for redressal of customer complaints and must make available the name, designation, address and contact number of important executives as well as the grievance redressal officer of the bank on its the website. Create a system of acknowledging customers complaints for follow-up, such as complaint number / docket number Naina Lal Kidwai becomes first woman president of FICCI
December 20th, 2012

Head of HSBC India, Naina Lal Kidawai took charge as the first woman President of Federation of Indian Chambers of Commerce and Industry (FICCI). Kidwai is also a recipient of the countrys prestigious civilian award Padma Shri for her contribution to trade and industry. Sachin Tendulkar The God of Cricket retires from ODIs
December 26th, 2012

Sachin Tendulkar had announced his retirement from One-Day format of cricket. It brings an end to his 23-year career in ODIs. He had made his debut in this format against Pakistanin 1989. In 463 ODIs he played, he piled up a total of 18,426 runs at an average of 44.83. He keeps a record of hitting 49 hundreds in the format, including a double hundred the first in this form of the game. He will now remain active in only the Test arena. Tendulkar was part of the 2011 World Cup winning Indian team after five

previous appearances. He smashed his last ODI hundred in the Asia Cup in Bangladesh which took his tally of international hundreds to unprecedented 100 international tons. $1.5 billion fine on UBS over Libor manipulation
December 24th, 2012

Swiss bank UBS has been fined $1.5 billion over the manipulation of Libor benchmark rate. It is the second biggest fine ever on a global bank after HSBC which was recently fined a record $1.92 billion after being accused by U.S. prosecutors of failing to enforce rules designed to prevent money laundering. Ratan Tata is chairman emeritus of Tata Sons
December 24th, 2012

Outgoing chairman of the $100 billion Tata group, Ratan Tata, has been conferred the honorary title of Chairman Emeritus of the group by Tata Sons. Cyrus Mistry will take the chairmanship. As chairman emeritus, Tata will not attend Tata Sons board meetings or have any day-to-day responsibility. Before Ratan Tata, JRD Tata had also been conferred this title by Tata Sons. While JRD had left the chairmans position at the Tata group trusts, Sir Dorabji Tata Trust and Sir Ratan Tata Trust, Ratan Tata would continue to remain the chairman of these trusts, which together have 66 per cent stake in Tata Sons. Samsung displaces Nokia to become Worlds No.1 mobile brand
December 24th, 2012

Samsung has left Nokia behind to gain the worlds leading top mobile brand for the year 2012. This is the first time in 14 years that Nokia is not on top of the global cellphone business on an annual basis. Samsung is expected to make around 29% of total worldwide cellphone shipments. It was 24% in 2011. Nokias share for 2012 will fall to 24% from the 30% market share in 2011. Apple stands at third position with expected 10% market share in 2012. Banking bill approved in Lok Sabha
December 23rd, 2012

Lok Sabha passed the Banking Laws (Amendment) Bill 2011, paving way for foreign investments in the sector and establishment of new privatebanks and also to achieve greater financial inclusion. The Bill does not contain controversial clauses of allowing banks to trade in futures and keeping the sector outside the purview of Competition Commission as it was earlier proposed. Highlights of the Bill:

Voting rights of investors in private sector banks raised to 26 %, from 10 % which will boost foreign investments. RBI allowed to supersede boards of private sector banks. Cap on voting rights of private investors in PSBs raised to 10%, from 1%. CCI to regulate mergers and acquisitions and will also have power to investigate and clear mergers and acquisitions in banking industry This Bill is expected to provide large number of new banking licences in near future. It will improve penetration of banking services in India. IntercontinentalExchange (ICE) to acquire NYSE
December 26th, 2012

Atlanta based exchange, IntercontinentalExchange Inc., is buying, more than 200 years old, New York Stock Exchange (NYSE) for about $8 billion. The deal has been approved by the boards of both companies, but still needs the clearance by regulators and shareholders of both companies. It is likely to close in the second half of 2013. IntercontinentalExchange, Inc., known as ICE, is an American financial company that operates Internet-based marketplaces which trade futures and over-the-counter (OTC) energy and commodity contracts as well as derivative financial products. Jeet Thayil among 24 selected for Sahitya Akademi Awards 2012
December 26th, 2012

Jeet Thayil, whose novel Narcopolis was nominated for the Booker, has been one among the 24 authors selected for Sahitya Akademi Awards 2012. He was selected for his poetry collection These Errors are Correct in English. About Sahitya Akademi Award The award was constituted in 1954 to honor outstanding works in the sphere of literature by Sahitya Akademi, the National Academy of Letters in India. The award is conferred for the works done in 24 major languages of India including English. BlackBerry appoints Ranbir Kapoor as its brand ambassador
December 26th, 2012

Blackberry smartphone manufacturer Research-In-Motion (RIM) has appointed Ranbir Kapoor as its brand ambassador in India. China names Infosys among 100 key outsourcing companies
December 26th, 2012

China has named Infosys in the list of 100 main liaison service outsourcing firms, making the IT giant the only to get this recognition.

Indian company

Infosys well- rounded portfolio of capabilities, exemplary performance and strong growth in China made its way into the list.

Service outsourcing has been identified as a key industry to be developed in China. It is governed by the Ministry of Commerce. SEBI gives final approval to MCX-SX
December 26th, 2012

SEBI gave its nod to MCX Stock Exchange (MCX-SX) for going live in new product segments such as equity, wholesale debt (bonds) and interest rate derivatives. Rare supercomet C/2012 S1 (ISON) to appear brighter than Moon in 2013
December 29th, 2012

As per astronomers, Earth will witness a rare supercomet, C/2012 S1 (ISON), rushing towards the Sun from the outer solar system and at its peak it may outshine the Moon in November, 2013. This is ISONs first trip to the inner solar system. Scientists expect it to put as good a show as Hale-Bopp did in 1997, which is believed to be the most widely observed comet of the 20 thcentury and one of the brightest seen for many decades. Its observations will also throw light on material in the outer solar system 4.6 billion years ago, when ISON formed. In 2013, a different kind of celestial fireworks will also take place when a gas cloud with three times Earths mass will collide with Sagittarius A(super-massive black hole) located at the centre of the galaxy around 25,000 light years away. India signs military deal with Russia
December 28th, 2012

Vladimir Putin visits to India $2 billion investment fund Finalised 10 agreements Two military contracts, worth about Rs. 20,000 crore Some issues of disagreement also there To take the initial steps towards operating a ranging station that will help accurately fix the location of satellites. Equity participation through ONGC-OVL On Russian president Vladimir Putins visit to India, both nations moved further to strengthen their economic relations by inking a pact on a Kremlin-backed $2 billion investment fund and consenting to open talks on a Comprehensive Economic Partnership Agreement (CEPA) that will also involve Belarus and Kazakhstan. At the 12th annual summit, the two countries finalised 10 agreements. Among them were two military contracts, worth about Rs. 20,000 crore. Issues of disagreement and more: However, little progress could be made on the issues of disagreement which include:

Delay in commissioning aircraft carrier Gorshkov Impasse over clinical trials in Russia

Applicability of the Nuclear Limited Liability Act on six new reactors to be set up by Russia at Kudankulam Inability of Russian companies Sistema and Severstal to move ahead with their investment plans in India Tax imposed on Imperial Energy, an Indian company operating in Russia. Russian company Sistema who suffered a setback after the Supreme Court cancelled all 2G licences, indicated its faith in the India withGlonass, its sister company, signing two pacts in the satellite sector. India has already signed the military side of the deal with Glonass, a group of 34 satellites in 2011. Both countries also agreed to take the initial steps towards operating a ranging station that will help accurately fix the location of satellites. A military side pact on receiving precision signals from Glonass was inked in 2011. Both nations also decided to further their partnership in the energy sector, which has moved beyond investment (Sakhalin-I) to direct trade (Gazprom-Gail) and is now moving towards joint investment in downstream and upstream sectors. Indias interests with Russia in Energy sector:

Equity participation through ONGC-OVL in existing and new projects in Siberia, Russias Far East and the Arctic Shelf. Acquiring equity stake in discovered or producing assets and in proposed Liquefied Natural Gas (LNG) projects in Russia. SBI, RDIF collaborate to form $2 billion consortium
December 28th, 2012

To encourage investments b/w the two nations, Indias State Bank of India (SBI) and Russian sovereign wealth fund Russian Direct Investment Fund (RDIF) came together to ink an MoU for setting up a$2 billion investment consortium. Both the groups would invest up to $1 billion each in the consortium. How this consortium would work? It will facilitate access to long-term capital in Russia and India and actively promote mutual investments. It will emphasize on projects accelerating towards higher purchasing power of the population, creation of value addition in the extraction and processing of natural resources as well as development of manufacturing businesses and service sector companies. As the consortium is supported by the government of the two nations, it will help in mitigating the risks that might arise from the global economic situation. With the partnership, the bank would have access to interesting and attractive projects from an investment point of view. FDI ceiling in ARCs increased to 74%
December 28th, 2012

With an aim to attract greater foreign expertise in the domain of asset reconstruction, the government has raised the foreign investment ceiling in Asset Reconstruction Companies (ARCs) to 74% from previous 49%. However, FDI in ARCs would need to abide by the Foreign Direct Investment (FDI) policy, including the one related with

sectoral caps. Here, Foreign investment implies that the limit of 74% would be a combined limit of FDI and FII (foreign institutional investors). This move will remove the prohibition on investment by FII in ARCs. The shareholding of an FII shall not exceed 10% of the total paid-up capital.

What are ARCs? Asset Reconstruction Companies (ACRs) which is also known as Asset Management Companies in foreign countries are centralized agencies that deal with the problem of bad loans of banks. The word asset reconstruction was first used, in context of Indian economy, in Narsimham I which proposed to establish a central Asset Reconstruction Fund with money contributed by the Central Govt, which was to be used by banks to resurrect their balance sheets to clean up their Non-Performing loans. However, this idea was not responded to. So Narsimham II report, opined to set up ARCs the likes of which are successful in countries like Malaysia, Korea and several other countries in the world. The ARCs were supposed to not only concern with the realization of bad loans but to also do reconstruction i.e. to try to revive the bad loans into g ood ones. Aam Aadmi, Janashree Bima Yojana exempted from service tax
December 28th, 2012

Government has exempted services of life insurancebusiness provided under Aam Aadmi Bima Yojana (AABY) and Janashree Bima Yojana (JBY)from service tax. Aam Aadmi Bima Yojana Launched in 2007 Covers death and disability insurance for the benefit of rural landless households. Insurance to the head of the family or earning member of the family of rural landless households b/w the age of 18 and 59 years against natural death or accidental death and partial/permanent disability. Annual premium payable is Rs 200 50% of the premium shall be payable by the Union Government from a separate fund created by the govt and operated by LIC and the remaining 50% by the State Government. Also provides for educational aid to the beneficiaries children studying from 9 th to 12th standard as an extended benefit. A separate fund has been set up for providing scholarship to the children of beneficiaries. Janashree Bima Yojana (JBY) Launched in August 2000 Life insurance protection to people who are BPL or marginally above poverty line. Persons aged b/w 18 years and 59 years and who are members of the identified 45 occupational groups are eligible for the scheme. Premium of Rs 200 per member

50% of premium comes from Social Security Fund maintained by LIC, rest 50% borne by the member and/or nodal agency. SBI unveils MobiCash Easy
January 3rd, 2013

State Bank of India (SBI) has unveiled its mobile wallet namedState Bank MobiCash Easywhich provides facilities such as fund transfer, bill payment, balance inquiry, mini statement, mobile top-ups and DTH recharge etc. How does SBIs MobiCash works? SBI is carrying out this plan in collaboration with a private service provider Oxigen which will do round-the-clock money transfer and other services. To avail the facility one can contact Oxigen outlets by sending SMS to 9870888888. After registration one can deposit money at the outlets and get his account recharged. The sum of money one deposits with the bank will be akin to money in ones account. Once it is done, this money can be used to send remittances to any bank account, transfer funds to other wallets issued by SBI, simply by messaging. At present, money withdrawal is not allowed, and the customer is not required to fulfil the KYC (know your customer) norm. The facility is available to both, SBIs customers as well as non -customers. SBI customers have an additional option of topping up the wallet using SBIs mobile banking service. The service is currently available in Mumbai andDelhi only. The service is aimed at migrant labourers who send money back home from SBI branches, the youth and those seeking to pay bills. It will also address the requirement of financial inclusion as it facilitates to extend financial services to un-banked population through the omnipresent mobile phones. Astras third launch also successful one
January 1st, 2013

India achieved a third consecutive success in the launch of anti-aircraft air-to-air Astra missile, which was fired from a static launcher on the ground at Chandipur, Odisha. Astra destroyed Lakshya, a pilotless target aircraft, successfully. Future plans: After three more ground-to-air launches in 2013, Astra will be fired from aircraft such as Sukhoi-30 MI, MiG-29 and the Light Combat Aircraft, Tejas. It can be launched from different altitudes and the distance at which it can kill an enemy aircraft depends on the altitude from which it is fired. Investment slumps in textiles; R-TUFS scheme to promote investments in sector
January 1st, 2013

In 2012, the textile and clothing industry in the country has made minimal investment in expansions and new projects.

In 2011, the Union Ministry of Textiles had announced the Restructured Technology Upgradation Fund Scheme (R-TUFS) with subsidy cap for each value adding segment, such as spinning, weaving and processing. The total subsidy amount provided for 2011-2012 was Rs. 1,972 crore. It was anticipated to leverage total investment of Rs. 46,900 crore. The subsidy claimed was only Rs. 362 crore. Though 3,542 applications were received, proposing a total investment of Rs. 35,892 crore (April 2011 to November 2012), implementation of the projects are delayed. What is R-TUFS? It is a scheme introduced by Govt. of India, Ministry of Textiles, to channelize investments towards hitherto low investments segments to facilitate a balanced growth across the value chain. Objectives of the Scheme: Addressing the issues of fragmentation and promoting forward integration by providing 5% interest reimbursement for spinning units with matching capacity in weaving/knitting/processing/garmeting Promoting investments in sector with low investment like processing Technology upgradation in weaving by providing higher capital subsidy for establishment of new shuttle-less looms Ensuring greater participation of SSI (Small Enterprises) units by increasing the limits under this category NCIPC to implement a 5-Year Project for Cyber Security of Critical Sectors // Critical infrastructure protection (CIP) //
December 30th, 2012

The central government has decided to establish five-year project for strengthening the overall cyber security structure of critical sectors of India. This move has come following increase in the number of incidents of cyber attacks as well as security threats. In 2011, India faced around 13000 cyber incidents. Who will implement the Project? It will be realized by National Critical Information Infrastructure Protection Centre (NCIPC) NCIIPC functions under the guidance of National Technical Research Organization (NTRO). NCIPC is the nodal agency which coordinates the cyber security operations related to critical infrastructures in India. NCIPC will set up sectoral Computer Emergency Response Teams (CERTs) and will also install sensors on critical systems for getting real-time information regarding cyber attack of any kind for preparing a quick response.

NCIPC of India has been proposed. NCIPC will ensure critical infrastructure protection and critical ICT infrastructure protection in India. Sectors whose cyber security falls under NCIPC are: Energy (natural gas, coal, oil and power) Finance and banking Transportation (civil aviation and railways) Space Law enforcement Security Telecom Defense What is Critical infrastructure protection (CIP) ?

Critical infrastructure protection (CIP) is a concept that relates to the preparedness and response to serious incidents that involve the critical infrastructure of a region or nation. Commission headed by Justice Usha Mehra to opine measures to make Delhi safe for women
December 30th, 2012

In response to furor and protest against the incidence of the gang-rape of a 23-year-old woman in Delhi, the Union Cabinet set up a Commission of Inquiry which will be headed by the former Delhi High Court judge, Justice Usha Mehra. It will also suggest steps to make Delhi and the NCR safer for women. to identify lapses and fix responsibility for the incident. The Justice Mehra Commission will be in addition to a three-member panel headed by the former Chief Justice of India, J.S. Verma. The committee will recommend amendments in law to provide for speedier trial and rigorous punishment in aggravated sexual assault cases amid demands for death penalty. The Centre rejected control of the Delhi police to the Delhi government saying the responsibility of law and order in the capital should remain with the Union government. Chief Minister Sheila Dikshit had demanded greater authority over city police after alleging that police officers had interfered in the recording of statement of the victim. Corporation Bank unveils RuPay Aadhar card
January 16th, 2013

Corporation Bank has launched Corp RuPay Aadhaar cardwhich has a primary aim to provide easy and smoothbanking services to the financially excluded and underprivileged sections of the society having Aadhaar number. The card can be used at the conventional ATMs, micro ATMs or at the handheld machines used by business correspondents and at point-of-sale terminals at merchant establishments.

Corporation Bank is an associate in the direct cash/benefit transfer scheme launched by the Government which will enable direct transfer of various social security benefits and subsidies straight into the accounts of the beneficiaries. Money laundering, banking bills turn into law with President assent
January 15th, 2013

President Pranab Mukherjee gave assent to the three financial sectors reforms laws namely, Prevention of Money Laundering (Amendment) Bill, Banking Laws (Amendment) Bill, Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Bill, 2012. The money laundering bill seeks to remove existing limit of Rs 5 lakh as fine under the Act. It proposes to make provision for attachment and confiscation of the proceeds of crime even if there is no conviction so long as it is proved that offence of money laundering has taken place, and property in question is involved in money-laundering. Government approves Rs.12,517 cr capital infusion in PSBs
January 13th, 2013

The Union Cabinet cleared infusion of Rs.12,517 crore in about 10 Public Sector Banks (PSBs) during the current fiscal to boost their lending potential and also assist them in meeting the stricter capital adequacy norms under Basel-III. Besides this, the Cabinet also gave an in-principle approval for providing need-based recapitalization of banks till 2018-19 for ensuring compliance with the Basel-III capital adequacy norms. In previous years also, same kinds of measures were taken by the government when it infused about Rs.20,117 crore in PSBs during 2010-11 and poured in another Rs.12,000 crore in 2011-12 to comply with the capital adequacy norms. Accordingly, keeping in mind the capital requirements in the coming years, the Cabinet gave an in-principle nod for need-based additional capital infusion in banks from 201314 to 2018 -19 to ensure compliance with Basel-III global banking norms aimed at minimizing financial risks. Implementation of Basel-III capital regulations increases requirement of core equity capital by banks due to higher capital ratios. The Basel-III capital ratios will be fully phased in as on March 31, 2018. RBI establishes Working Group to review Banking Ombudsman Scheme
January 12th, 2013

Taking into consideration the suggestions by Committee on Customer Service in Banks (Damodaran Committee) relating to BankingOmbudsman Scheme 2006 and the Rajya Sabha Committee on Subordinate Legislation, Reserve Bank of India (RBI) has constituted a Working Group which will be headed by Suma Verma with an aim to review, update, and revise the Banking Ombudsman Scheme, 2006.

The background of Banking Ombudsman Scheme. What sort of complaints doest this scheme handles? As per the Annual Report of the Banking Ombudsman Scheme, 2011-12 released by the RBI: Total number of customer complaints received in Banking Ombudsmans (BO) offices of the RBI was 72,889 in 2011-12. Highest number of complaints was received by Kanpur and NewDelhi in 2011-12, followed by Chennai and Bhopal. Rate of disposal of customer complaints by Banking Ombudsmen was 94 % during 2011-12, the same as that done during the previous year. Largest number (25%) of customer complaints were about failure to meet commitments/non-observance of fair practices code 21% were card related (ATM/Debit/Credit) complaints 12% complaints were relating to deposit accounts The background of Banking Ombudsman Scheme The RBI notified the Banking Ombudsman Scheme, 1995 on June 14, 1995 in terms of the powers conferred on the Bank by Section 35A of the Banking Regulation Act, 1949 (10 of 1949) to provide for a system of redressal of grievances against banks. The scheme has gone through four revisions in 2002, 2006, 2007 and 2009 to make it more relevant and effective. Currently, there are 15 Banking Ombudsmen with specific jurisdiction covering the 29 States and seven Union Territories in India. Since January 2006, the BOS is fully financed and administered by the RBI and its serving officers in the rank of Chief General Managers and General Managers are posted as Banking Ombudsmen. What sort of complaints doest this scheme handles? It looks into a wide range of complaints pertaining to deficiency in banking service rendered by Scheduled Commercial banks, Scheduled Primary Urban Co-operative banks and the Regional Rural banks. The key areas of customer complaints covered under the scheme include credit card complaints, internet banking, deficiencies in providing the promised services by both bank and its sales agents (DSAs), levying service charges without prior notice to the customers, non-adherence to the Fair Practices Code adopted by individual banks, non-adherence to Banking Codes and Standards Board of Indias Code of Banks Commitment to Customers, etc. Currently, there are 27 grounds on which customers can approach the Banking Ombudsman mentioning deficiency in banking services. Urjit Patel is the new deputy governor of RBI
January 6th, 2013

Urjit Patel succeeded Subir Gokarn to become new deputy governor at the Reserve Bank of India. Patel is PhD in economics from the Yale University and a non-resident senior fellow at the Brookings Institution, a US-based think-tank. He will have a 2-year term at the regulator. Banks to ask RBI to permit interest on current accounts
January 18th, 2013

In the run up to the RBIs Monetary Policy Review, banks will ask the central bank to allow them to pay interest on current account deposits. Currently, there is no interest given by banks on current accounts. Banks are of the view that providing interest on current account will generate more cash flow into the system which otherwise stays with the establishments. Current accounts make 9.85 % of total deposits with banks. Banks will also demand a slash in CRR as well as in repo rate. R. K. Dubey assumed charge as CMD of Canara Bank
January 16th, 2013

R.K. Dubey has been appointed as the Chairman and Managing Director ofCanara Bank Deadline for Banks to comply with Basel-III relaxed, liquid asset definition made flexible
January 16th, 2013

The Basel Committee has extended the deadline given to banks around the world to comply with Basel-III norms has been deferred for 4 more years to January 2019 against the previous deadline of January 2015. Basel-III sets global minimum standards for banks and proposes for minimum holding of cash and liquid assets by banks in order to make them financially sound against the possibility of another financial crisis to the scale of Lehman Brothers in 2008 and to avoid the situation where in the taxpayers have to bail out the cash-strapped banks. The definition of liquid assets has also been made flexible to include shares, retail mortgage-backed securities (RMBS) and lower-rated company bonds. However, the less liquid assets could be considered as buffer assets at a heavy discount to their value. Why this extension? The Banks around the world have complained of inability to meet the deadline as the guidelines could obstruct lending and damage economic growth. As per new norms, the banks have to phase in the compliance in 2015 and are expected to meet at least 60 % of the total buffer assets by then. They are required to meet 100% of the "liquidity coverage ratio" by January 2019 to survive an acute 30-day crisis. The new rules have put the buffer assets of worlds top 200 banks to 125 % from the current 105%, well above what is required for full compliance. lending
January 16th, 2013

Allahabad Bank has inked an MoU with the Chamber of Indian Micro, Small and Medium Enterprises (CIMSME) to prop up its priority sector lending. CIMSME communicates the interests of companies in MSME sector, withbanks, financial institutions, concerned ministries and other organizations. What is the agreement? As per the pact, CIMSME would mobilize proposals from its members for consideration of the bank. Once the loan is approved, the organization would support the bank in followup and recovery of dues and provide early warning signals, if any.

How will it help? The agreement will help speed up the process of disposal of loan proposals under MSME and help the bank collect quality proposals and enhance credit flow to the sector. Raj Kumar Goyal is new ED of Central Bank of India
January 16th, 2013

Raj Kumar Goyal has been appointed as the new Executive Director of Central Bank of India. Goyal comes in place of Rajeev Kishore Dubey, who has taken over the control of Canara Bank as its Chairman & Managing Director. Proceeds of NIF allowed to be used to fund bank recapitalization: CCEA
January 19th, 2013

In a move made to enhance disinvestment policy, the Cabinet Committee on Economic Affairs (CCEA) chaired by PM Dr. Manmohan Singh has permitted the National Investment Fund (NIF) to buy shares of public sector enterprises, including banks and insurance companies. Now the fund will be use for subscribing to the shares being issued by the Central Public Sector Enterprise (CPSE) including Public Sector Banks (PSBs) and Public Sector Insurance Companies, on rights basis so as to ensure that 51% ownership of the government is not compromised. National Investment Fund (NIF) NIF was established in 2005 to channelize the proceeds generated through the sale of minority shareholding of CPSEs. The Fund would be maintained outside the Consolidated Fund of India. For what purposes the fund is being used currently? Who manages the Fund? The income from the Fund is to be used for the following broad investment objectives: 75% to finance selected social sector schemes, which promoteeducation, health and employment 25% to meet the capital investment requirements of profitable and revivable CPSEs that yield adequate returns, in order to enlarge their capital base to finance expansion/diversification However, because of the difficult economic situation caused by global slowdown, the government in November 2009 decided to utilize proceeds from disinvestment only for social sector spending. This exemption is applicable till March 2013. Who manages the Fund? NIF fund managers are: UTI Asset Management Company Ltd. SBI Funds Management Company (Pvt.) Ltd.

LIC Mutual Fund Asset Management Company Ltd. Axis Bank offers e-Gift Card service
January 19th, 2013

Axis Bank has launched Axis Bank e- Gift Cardwhich is an online version of physical plastic gift cards. What does it offer? The e-Gift card allows the customers to buy gift cards in an alternate way. The card carrying a particular value can be bought by using debit or credit card. This card can be gifted via email or SMS to the recipient who can use it to purchase anything online across categories like apparels, airline tickets, books etc. It also saves the sender from the puzzling situation of what to buy for gift. All purchase transactions shall be limited to sites that support verified by Visa and MasterCard secure code for two factor authentication. RBIs multiple roles create conflict: IMF
January 19th, 2013

As per International Monetary Fund (IMF) report, India, despite its recent successes in developing a stable financial system, its financial sector still faces up obstacles to its ability to support growth and stability. As per report, which is part of IMFs Financial Stability Assessment Programme (FSAP): Extensive role of government in the financial sector- through ownership of large financial institutions, captive government financing, directed credit to priority sectors, strict controls over the range of permissible activities, and limits on the accessibility of foreign capital contributes to a pile-up of fiscal contingent liabilities and creates a risk of capital misallocation that may hinder economic growth. Indian financial system remained predominately stable owing to its sound regulatory and supervisory regime. However, there are some voids, including some limits on the de jure independence of the regulators (RBI and IRDA). Banks have sufficient buffers in the form of high quality assets (cash and holdings of government paper) to respond any eventuality of reversal of capital flow or liquidity pressure owing to ongoing upheaval in international markets. Multiple roles of RBI such as monetary authority, bank regulator, and government debt manager may have led it to require banks to hold larger holdings of government debt than might be needed on prudential grounds. Board members of public sector banks must be independent and not from the RBI as nomination of RBI officers as board members of banks may be conflicting to the supervisory role of the central bank. Use of the banking system rather than government programmes in meeting the needs of priority sectors agriculture, small and micro credit, education, health and underserved areas may conflict with RBIs supervisory role. RBI should be given greater powers to conduct carve-outs and the central bank should give more attention to crisis readiness.

Strengthening of resolution powers and contingency planning for insurance companies and the payment system. World Bank cuts Global Growth estimates for 2013
January 19th, 2013

World Bank sharply slashed the global growth outlook for 2013 to 2.4%from earlier estimate of 3%. As per World Bank, major economies around the world are still facing hurdles towards recovery, despite improved conditions in financial markets. It also cut its forecast for developing countries, which last year grew at their slowest pace in a decade, to 5.5 % in 2013 from 5.9% in a June, 2012 forecast. The growth in these countries should slowly gather up, touching 5.7% in 2014 and 5.8% in 2015. As per projections, growth in advanced economies should reach 1.3 % in 2013 dragged down by spending cuts, high unemployment and weak consumer and business confidence. It would touch 2% in 2014 and2.3% in 2015. The Bank called on the developing countries to focus on internal productivityenhancing policies to give growth a fillip. RBI introduces Dollar- Rupee swap facility
January 18th, 2013

RBI has introduced a dollar-rupee swap facility. Objective: To increase the flow of credit to the export sector to support incremental Pre-shipment export Credit in Foreign Currency (PCFC) by banks. As per RBI, banks will have the option to avail rupee refinance to the extent of the swap with RBI under a special export credit refinance facility. The facility will be available to banks from January 21 till June 28, 2013, for a fixed tenor of three or six months. The total limit for the banking system works out to $6.5 billion. Banks will be able to buy US dollars up to its eligible swap limit from RBI and at the same time sell the same amount of dollars forward as per the term of the swap, at the prevailing market rates for swaps of similar tenor. At the end of the swap term, the banks will exchange the dollars against the rupees with RBI. RBI will decide upon the number of banks that can access the facility, the maximum amount of swap that RBI would contract with banks and the maximum limit each bank can do on a particular day after taking into account market conditions. 25 RRBs merged into 10
January 24th, 2013

Restructuring of RRBs by merging geographically contiguous RRBs sponsored by different banks within a state is in progress in order to consolidate RRBs segment. During the first 9 months of the current fiscal 25 such banks have been merged into 10. Now the number of RRBs stands at 67 till the first week of Jan 2013. RRBs have a

network of about 16,000 branches spread across the rural and semi-urban centres of the country. What is the aim of consolidation? The consolidation of RRBs has been progressing since 2005 following the recommendation of a committee chaired by RBI Deputy Governor K C Chakrabarty which decided to recapitalize 40 selected RRBs in 21 states. These mergers will boost the capital base of RRBs and improving efficiencies as well as optimizing the use of modern technology. Where did these mergers take place? States where the mergers took place are Bihar, Karnataka,Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh andUttarakhand. The Centres shareholding in RRBs is 50%, while 35% and 15% are with the sponsor banks and state governments, respectively. Central Government to infuse Rs 3,004 crore in SBI
January 24th, 2013

The Central Govt will infuse a capital of Rs. Rs 3,004 crore in State Bank of India (SBI) as a part of capital infusion plan for the current fiscal. The liquidity infusion will enable the bank to support national andinternational banking operations undertaken through its subsidiaries and associates. The capital will be infused by way of preferential allotment of equity shares to the government. In the last fiscal, SBI was infused with Rs 7,900 crore to increase its Tier-I capital. After the capital infusion in March 2012, the government stake in SBI increased to 61.58 % from 59.4%. The government had recently given nod to capital infusion of Rs 12,517 crore in around 10 state-owned banks by March, 2013. PNB to get Rs 1,248 cr from Central Govt
January 24th, 2013

The Central Government will to infuse Rs 1,248 crore in Punjab National Bank (PNB) through preferential allotment of shares. The decision is part of recently approved capital infusion plan of Rs 12,517 crore in around 10 state-owned banks by March, 2013. S S Mundra appointed as the new CMD of BoB
January 24th, 2013

S S Mundra has been appointed by the Government of India as theChairman and Managing Director (CMD) of Indias second largest lender- Bank of Baroda. He is the former Executive Director of Union bank of India.

Tags: Banking January 2013 Persons in News

SBI to set up by-invitation-only branches to serve Super-rich and NRIs

January 20th, 2013

Indias largest public sector bank, State Bank of India (SBI), along with its associates, plans to set up by-invitation-only branches under the Kohinoor brand in 20 cities to serve uber-rich customers and Non-Resident Indians (NRIs). What would be so special with these branches? These branches will be operational 24X7 and have amenities like lounges, conference rooms, personal business centres and cafeterias. The branches will offer all the banking products and services of SBI and its subsidiaries. The bank will assign personal banker to each client. Clients can either visit the branch or interact with staff over video chat for their banking needs. SBI had launched first such branch Kohinoor Banjara in Hyderabad in 2010. While the bank has not specified any minimum deposit requirement, it expects customers to have at least Rs 1 crore of deposits in the branch. SBI had launched first such branch Kohinoor Banjara in Hyderabad in 2010. RBI revises norms for bulk deposits
January 29th, 2013

The Reserve Bank of India (RBI) has revised the rules for bulk deposits, offering differential interest rates, which would be applicable with effect from April 1, 2012. As per the revised rules: The Reserve Bank of India (RBI) has revised the rules for bulk deposits, offering differential interest rates, which would be applicable with effect from April 1, 2012. As per the revised rules: A depositor will be allowed to withdrawal a term-deposit before completion of the period of the deposit agreed upon at the time of making a deposit. Banks shall have the freedom to determine its own penal interest rate of premature withdrawal of term deposits. Depositors must be informed by the bank about the applicable penal rate along with the deposit rate. However, the banks will still have the discretion to deny the premature withdrawal of large rupee term deposits of Rs.1 crore and above. The bank should, however, notify such depositors of its policy of disallowing premature withdrawal in advance, at the time of accepting such deposits. Banks can charge different rates of interest only on bulk deposits of above Rs.1 crore and above compared to the previous limit of Rs.15 lakh and above. For deposits below Rs.1 crore of the same maturity, the same rate will apply. Interest rates paid by the bank should be as per the schedule and should not be subject to negotiation b/w the depositor and the bank. Canara Bank to launch e-Lounge services
January 28th, 2013

Canara Bank is about to unveil its e-Lounge services in Bangalore andDelhi.

What this service would offer? e-Lounge will cater to the needs of corporate, IT and businessprofessionals. It would offer Services of ATM, cash deposit kiosk, check deposit kiosk, pass book update, internet banking terminal, online trading terminal, corporate web site terminal to offer latest information of banks services all under one roof. The bank would launch first e-Lounge at Koramangala Branch, Bangalore Vision Life Income launched by Birla Sun Life Insurance
January 26th, 2013

Birla Sun Life Insurance has launched its first participating plan Vision Life Income. It offers a perfect blend of income and financial protection for the customers family as it pays survival benefits every year from the end of the premium paying term till maturity and life insurance benefit. The plan offers guaranteed regular income for life post-premium paying term, a discount in premium on high sum assured and income-tax benefits. Govt to infuse Rs 681 crore in UCO Bank
January 26th, 2013

As part of governments plan to infuse Rs 12,517 crore in around 10 state owned banks by March, 2013, UCO Bank will be infused with Rs 681 crore. The bank will issue equity shares on preferential basis in favour of Government of India for an amount aggregating to the tune of Rs 681 crore. RBI panel suggests banks to encourage long-tenor FD schemes
January 26th, 2013

A Reserve Bank of India (RBI) committee which studied the feasibility of introducing more long-term fixed rate loan products by banks, made following suggestions: Banks should popularize Fixed Deposit (FD) schemes with tenors of above 5 years as they are eligible for tax exemption. It would help banks in meeting their long-term funding requirements. Besides plain vanilla fixed rate loan products, banks can offer fixed rate long-term loan products with periodic interest reset provision (say every 7-10 years). However, the resetting of interest rate should be in line with the regulatory guidelines on base rate. Banks which have not fully exploited the sector of long-term bonds (minimum maturity of five years) to the infrastructure sector (minimum residual maturity of five years) could make use of the room available to issue more long-term bonds which would aid release resources for extending long-term fixed rate loan products. Banks can consider offering longer-tenor fixed rate loans, say up to 30 years, which would help reduce the EMIs of borrowers. Banks can also workout the option of take-out financing and can also explore promoting securitization market for better asset liability management. Banks should charge pre-payment penalty on fixed rate loan products on the outstanding amount only. Union Cabinet gives nod to amendments to Regional Rural Banks (RRBs) Act, 1976
February 6th, 2013

The Union Cabinet approved the Rural Banks (RRBs) Act, 1976 Objective:

amendments

proposed

in

the

Regional

To enhance authorized and issued capital to strengthen their capital base. The term of the non official directors appointed by the Central Government is proposed to be fixed not exceeding 2 years. How these amendments will it help RRBs? These amendments are aimed at bringing financial stability in RRBs which will make then capable to play a larger role in financial inclusion and meet the credit requirements of rural areas and strengthen the Boards of RRBs. A brief account of RRBs Regional Rural Banks (RRBs) were set up under Regional Rural Banks Act, 1976 (the RRB Act) to build an alternative channel to the cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector. The ownership of RRBs is jointly with the Government of India, the concerned State government and sponsor banks, with the issued capital shared in the proportion of 50%, 15 % and 35%, respectively. As per provisions of the Regional Rural Banks Act, 1976 the authorized capital of each RRB is Rs. 5 crore and the issued capital is a maximum Rs. 1 crore. SBI slashes base rate to 9.7%
February 4th, 2013

Indias largest public sector bank, State Bank of India, has cut its base rate (minimum lending rate) marginally from current 9.75% to 9.70%. The decision came following RBI cut its key policy rate and the cash reserve ratio by 25 basis points each. The effect of central banks move is also visible as HDFC bank has reduced interests on auto loan by up to 50 basis points without altering its base rate, which is currently at 9.70%. The interest rate on car loans has been cut by 25 basis points to the 10.50-11.50 % range. After RBI announced cut, IDBI Bank was the first off the block to reduce base rate as well as its benchmark prime lending rate by 25 basis points each. SEBI revises OFS mechanism
February 2nd, 2013

Market regulator, the Securities and Exchange Board of India (SEBI), has revised the Offer For Sale (OFS) mechanism as the deadline is approaching for the promoters of listed companies to offload their stake to meet the minimum public shareholding norm of 25 % by June 2013. As per SEBI, the revised norms: The cumulative bid quantity will be made available online to the market throughout the trading session at specific intervals in respect of orders with 100 % upfront margin and separately in respect of orders placed without any upfront margin.

The indicative price shall be disclosed to the market throughout the trading session. This is also calculated based on all valid bid / orders. Institutional investors have a choice to pay either upfront 100 % margin in cash or without margin. However, non-institutional investors have to pay 100% upfront margin in cash. Orders with 100% margin paid upfront by institutional investors and non-institutional investors can be modified or cancelled at any time during trading hours. Orders without paying upfront margin by institutional investors cant be modified or cancelled except make upward revision in the price or quantity. Institutional investors who placed orders / bids with 100% margin upfront, custodian confirmation would be within trading hours and settlement shall occur on T+1 (trading plus one day) and without upfront margin it will be on T+1 and settlement will be on T+2 as it is now followed in secondary market transactions. SEBI has eliminated the extended half-an-hour time after trading hours given to the custodians. RBI cuts repo rate and CRR, slashes growth forecast to 5.5%
January 31st, 2013

The Reserve Bank of India (RBI) eased its tight monetary policy by slashing its key interest rates by 0.25% and released Rs 18,000 crore additional liquidity into the system to stimulate growth through reduced cost of borrowing. RBI cut the Repo Rate by 0.25% to 7.75% and Cash Reserve Ratio (CRR) by similar margin to 4%. The cut in repo rate is expected to bring down the borrowing rates individuals and corporate. The slash in CRR, which is the portion of deposits that banks have to keep with RBI, would enhance the availability of funds. The RBI, however, has cut down the growth projections for the current financial year to 5.5% from its earlier estimate of 5.8%. Exide Industries to acquire ING stake in Indian life insurance joint venture
January 30th, 2013

Dutch banking and insurance group ING has decided to sell its 26% stake in an Indian insurance venture to local partner Exide Industries. ING is in the process of selling all its Asian insurance and investment management operations. Exide would acquire INGs 26 % percent in ING Vysya. It would also buy 24% from two other private Indian investors Enam Group and Hemendra Kothari Group for a total of about 5.5 billion rupees ($102 million). Within the period of a year, ING is second company to exit Indian insurance market after New York Life sold its 26% stake in a life insurance joint venture with Max India to Japans MS&AD for about $530 million. Why are these companies making exit from India? The Indian insurance sector which was quite promising till 2000 is now battered by losses, regulatory change, uncertainty and a acute slowdown in economic growth.

A proposal to increase the foreign investment in insurance firms to 49% from current 26% which is important to attract funds to the loss making sector, has been pending for a long time due to political impasse. The life insurance industry which holds around three-quarters of the Indian insurance sector has lost a combined $4 billion in the past decade and was jolted by a 2010 crack down on the sale of lucrative equity-linked products. Corporation Bank launches new variants of savings bank accounts
February 8th, 2013

Corporation Bank has rolled out two new types of savings accounts namely SB Super and SB Signature. A customer should maintain a minimum Quarterly Average Balance (QAB) of Rs 15,000 for SB Super and Rs 1 lakh for SB Signature. Customers having any of the two accounts will be offered preferential loan processing. Both accounts offer bundled demat and trading account including a waiver of annual maintenance charges for the first year. They also bring concessions and offers like free NEFT, SMS banking, and 25 % concession in bank charges for gold coins. PNB buys 30% stake in MetLife India
February 8th, 2013

Punjab National Bank which is Indias second-largest bank has acquired a 30% stake in the Indian subsidiary of the biggest US life insurer MetLife at an unrevealed amount. Naseer Ahmed is the new Director of Syndicate Bank
February 8th, 2013

C R Naseer Ahmed has been appointed as the Director of Syndicate Bank. The Government of India has nominated Ahmed as part-time non-official director on the Board of Directors of Syndicate Bank for a period of 3 years. Minimize number of free cheque books issued to individuals: RBI
February 7th, 2013

The Reserve bank of India (RBI) has recommended in its discussion paper that the number of free cheque books given per year to individuals may be kept to a minimum and instead they should be encouraged to use electronic payments. As per central banks recommendations: Banks may levy moderate or steep charges on cheques issued beyond this minimum number. In case of fresh loans, post-dated cheques (PDCs) should be completely stopped and repayments should be only through electronic payments, with suitable conditions for late payment and non-payments, which should be disclosed upfront. Current PDCs should be converted to electronic payment mandates within a prescribed timeline. Credit card dues should be paid electronically. In case cardholders make payments of dues using cheques, then the issuing banks may levy high convenience charge.

Banks may set some amount/value limit for cheques issued by individuals. Such charges may be higher than the charges levied on electronic payments of similar value. Banks may levy a processing charge in case of individuals who have invested in shares/debentures/bonds and have not opted for receiving dividend/interest directly into their bank accounts, deposits the cheque into their bank account for collection. Cheque collection boxes at public places should be discouraged and should be provided only at bank branches. ICICI Bank ties with Aircel for Mobile Money
February 7th, 2013

Indias largest private sector bank, ICICI Bank has partnered with Aircel to launch a mobile banking service, Mobile Money. With the help of this service the unbanked customers of these two companies will be able to transfer money securely and instantly through their mobile phones without getting connected to data services. The service will work towards financial inclusion of those who face problems in transferring money due to absence of branches or ATMs closer to them by offering a range of financial services such as deposits and cash withdrawals, money transfer to third parties, self-reload of prepaid mobile credit, and various utility bill payments. The service will be first launched in Tamil Nadu to specifically cater to the needs of migrant working population. Government nominates C R Naseer Ahmed on the Board of Directors of Syndicate Bank
February 11th, 2013

The Central Government has nominated Mr. C R Naseer Ahmed as part-time non-official director on the Board of Directors of the Bank for a period of three years from February 01, 2013 or until further orders, whichever is earlier.Source. Dell ready to become private in $24 billion deal
February 11th, 2013

PC manufacturer Dell is ready to go private in a $24.4-billion buyout. The company which is facing slump will pay its stockholders $13.65 per share to leave the company on its own. The company will be sold to a group of investors that includes investment firm Silver Lake. Once this is done, DELL will stop trading on the NASDAQ. Dell did rapid growth through the 1990s which brought its founderMichael Dell into one of the worlds richest people. Michael Dell, who owns nearly 16% stake in the company, will remain the CEO after the sale closes. Dells sale is the highest-priced leveraged buyout of a technology company. What is a Leveraged buyout (LBO)? LBO = Acquisition of a company (or a part of a company or it can also be single asset like a real estate) using a substantial amount of borrowed money (bonds or loans / debt) to meet the cost of acquisition.

The financial buyer (e.g. private equity fund) puts a small amount of equity (relative to the total purchase price) and utilizes leverage (debt or other non-equity sources of financing) to fund the rest of the amount that is paid to the seller. LBOs can have many different forms such as Management Buy-out (MBO), Management Buy-in (MBI), secondary buyout, tertiary buyout, etc. Can LBO be employed in public companies also?

YES. Though, mostly LBOs occur in private companies, but it can also be employed with public companies. The +ves of Leveraged buyout::

In LBO transactions, financial buyers seek to generate high returns on the equity investments and use financial leverage (debt) to increase these potential returns. Financial backers of Dell are of the view that it will be easier to engineer a turnaround without having to pander to the stock markets fixation on whether the companys earnings are growing from one quarter to the next. Taking the company private will leave it without publicly traded shares to attract and reward talented workers or to help buy other companies. The -ves of Leveraged buyout:

LBOs need companies to reserve some of their incoming cash to reduce the debt taken on as part of the process of going private. The obligations mean Dell will have less money to invest in innovation and expansion of its business. Equity holders Risk arises due to significant financial leverage. Interest amount that has to be paid for the debt taken by the company are are "fixed costs" and thus they can in future force the company into default if they not paid. Debt holders The debt holders assume the risk of default compared with higher leverage as well, but as they have claims on the assets of the company, they are likely to realize a partial, if not full, return on their investments, even in bankruptcy. What is Management Buyout (MBO)? MBO is quite similar to a LBO, but the difference is that in an MBO the Management Team of the target company acquires the company instead of a financial sponsor as in case of a LBO. Example: Mr. Ram is the sole owner of XYZ company. Mr. Ram is now 65 years old and is set to retire in coming months and exit the business. Now, the Higher Management Team at the company believes strongly that the company has good future ahead and so the Management people come together and they buy out the Mr. Rams (owners) equ ity in the company and assume control in the XYZ company. Britain confers new powers to regulators to break up banks
February 11th, 2013

The UK government has given new powers to regulators which can now break up banks if they fail to protect their retail operations from their riskier investment arms. The government is cautious keeping in mind the happenings of past when risky investments undermined banks stability in 2008, leading to taxpayer bailouts of two big UK banks. The new measure gives regulators the power to force a complete separation of a lenders retail business from its investment banking. Sharad Sharma becomes ED of Geojit BNP Paribas
February 9th, 2013

Sharad Sharma has been appointed as the Executive Director of GeojitBNP Paribas to oversee the companys operations. Satish Menon, also the Executive Director, will be responsible for all business lines. Things you should know about BNP Paribas and Geojit BNP Paribas - Logo: Geojit BNP Paribas:

- BNP Paribas is a French global banking group, headquartered in Paris. - BNP Paribas was formed in 2000 via the merger of Banque Nationale de Paris (BNP) and Paribas in 2000. - Bloomberg and Forbes in 2012 ranked BNP Paribas as the 3rd largest bank in world on basis of the total assets held by the bank. - SBI Life Insurance is a Joint-Venture b/w SBI (74%) and BNP (26%) Paribas Assurance. - Geojit was a company started in 1987 by Mr. C. J. George and Mr. Ranajit Kanjilal. In 1994, it became a Public Limited Company named Geojit Securities Ltd. - In 2007, BNP Paribas took a stake majority stake in Geojit Securities Ltd. and consequently, evolved Geojit BNP Paribas Financial Services Ltd. Kotak Mahindra Bank acquires Barclays Indias business loan portfolio
February 9th, 2013

Kotak Mahindra Bank has acquired the business loans portfolio fromBarclays Bank plc India branch and Barclays Investment and Loan (India Ltd) for an undisclosed sum. RBI directs Co-op banks to not grant loans for gold purchase
February 15th, 2013

The RBI has directed State and Central co-operative banks not to give loans for purchase of gold in any form to curb the considerable increase in its import in recent years.

Currently, these banks are allowed to grant loans against pledge of gold ornaments, but not permitted to grant any advance for purchase of gold in any form. They offer loans for various purposes against the security of gold/gold ornaments as part of their lending policy. Banks to start loans recovery from Kingfisher
February 15th, 2013

Troubled air carrier Kingfisher Airlines is at moribund point as its key lenders have decided to recall the loans given to the company. The consortium of 17 banks led by State Bank of India (SBI) has anexposure of Rs. 7,000 crore to the Kingfisher. Banks had to consider this extreme measure as the airlines management could not devise with any reliable revival plan. Its flying licence has been cancelled since January 1, 2013. It stopped flying since October 1, 2012, following a strike. Government considers enhancing NABARD capital base to Rs 20,000 crore
February 14th, 2013

The government is cogitating to expand the capital base of Indias apex farm development bank National Bank for Agriculture and Rural Development (NABARD) to Rs 20,000 crore from existing Rs 5,000 crore. The increase in authorised capital will augment the operations and broaden the activities of NABARD. Following these changes NABARD would be able to undertake short term lending operations and introduce new credit products. Financial Institutions Syndicated Deal of the Year 2012 award goes to YES Bank
February 11th, 2013

YES Bank has been awarded the Financial Institutions Syndicated Deal of the Year 2012 in its Asia Pacific Region. The award was given for $155 million loan syndicated by YES bank which was distributed across 9 different countries from 14 banks. The award was given away by Asia Pacific Loan Market Association (APLMA), which is a leading trade association for syndicated loan market in this region. Corporation Bank offers new variants of savings bank accounts: SB Super and SB Signature
February 11th, 2013

SB Super and SB Signature are the new variants of savings account launched by Corporation Bank. Facilities with these accounts: Both offer preferential loan processing by affixing priority seal by the branch while forwarding loan applications. Bundled demat and trading account including a waiver of annual maintenance charges for the first year. Free NEFT, SMS banking, and 25 per cent concession in bank charges for gold coins, Condition: A customer should maintain a minimum quarterly average balance (QAB) of Rs 15,000 for SB Super and Rs 1 lakh for SB Signature.

Dishonoring of cheque given as security is not punishable: Supreme Court

February 21st, 2013

The Apex Court has held that dishonoring of a cheque given as securityis not liable to be visited with a penalty under Section 138. It is generally thought that dishonoring of a cheque in any circumstances can attract penal action. However, the Negotiable Instruments Act itself contemplates the presumption of a cheque having been issued for consideration or discharge of debt being amenable to rebuttal. Fact Box: Saxo Bank
February 20th, 2013

Saxo Bank enters Indian market Saxo Bank has announced its entry into the Indian market to provide trading platform for foreign equities. About Saxo Bank: An Online Danish investment Founded: Headquarters: Copenhagen, Denmark Chairman: Kurt K. Larsen, Chairman Vice Chairman: Dennis Malamatinas CEO: Kim Fournais Founder members: Lars Seier Christensen, Kim Fournais and Marc Hauschildt. 1992: Saxo was originally founded as a brokerage firm under the name Midas Fondsmglerselskab. 2001: The company obtained a banking license and its name was later changed to Saxo. Services offered: Trading via an online platform SaxoTrader in Forex, Stocks, CFDs, Futures, Funds and Bonds. Private Wealth Management services. The bank provides online trading and investment across global financial markets. Saxo Bank is well known internationally for its success in Internet brokerage and it has bagged number of awards for the same. bank. 1992

50% increase in Bad loans of listed Banks

February 19th, 2013

The bad loans or Non Performing Assets of listed banks swelled by 50% at Rs 30,840 crore in the first nine months of the current financial year ended December 31, 2012. The net Non-Performing Assets (NPAs) of 40 listed banks surged to Rs 92,398 crore as on December 31, 2012, from Rs 61,558 crore as on March 31, 2012. The net NPAs in State Bank of India, Punjab National Bank and Bank of Baroda rose by 60%, 70% and 118% respectively. Fact Box: Priority sector lending (PSL)
February 16th, 2013

Priority sector lending (PSL) by public sector banks to minorities to minorities surpassed 15% mark. Priority sector lending by public sector banks to minorities has increased from 10.6% in 2007-08 to 15.01% in 2012-13 with a total lending of Rs 1,71,960.71 crore to minorities. Priority sector lending to minorities is one of the schemes covered under prime ministers new 15 point programme for the welfare of minori ties. What is Priority Sector Lending? Priority Sector Lending is an important role given by the Reserve Bank of India (RBI) to the banks for providing a specified portion of the bank lending to few specific sectors like agriculture or small scale industries. Basically this is meant for all round development of the economy apart from only focusing on the financial sector. Are there minimum limits? The limits are prescribed according to the ownership pattern of banks. While for local banks, both the public and private sectors have to lend 40 % of their net bank credit, or NBC, to the priority sector as defined by RBI, foreign banks have to lend 32% of their NBC to the priority sector. Are there specific targets within the priority sector? Domestic banks have to lend 18 % of NBC to agriculture and 10 % of the NBC has to be to the weaker section. However, foreign banks have to lend 10 % of NBC to the smallscale industries and 12 % of their NBC as export credit. However, for the balance, there are a vast number of sectors that banks can lend as priority sector. The Reserve Bank has a detailed note of what constitutes a priority sector, which also includes housing loans, education loans and loans to MFIs, among others. What if a bank does not achieve priority sector lending targets? Domestic banks having a shortfall in lending to priority sector/ agriculture are allocated amounts for contribution to the Rural Infrastructure Development Fund ( RIDF ) established in NABARD. In case of foreign banks operating in India, which fail to achieve

the priority sector lending target or sub-targets, an amount equivalent to the shortfall is required to be deposited with SIDBI for one year. Equity investment limit for Insurance companies raised to 15 %
February 15th, 2013

The Insurance Regulatory and Development Authority (IRDA) has raised the equity investment limit for the Insurance companies to 15% up from existing 10%. The move follows the Finance Ministry pitching for raising the equity investment limit for insurance giant LIC to up to 30%. With this permit Insurance companies will be allowed to increase their investments in equity in a given company from the present level of 10% to a higher level of 12% and 15% depending upon the size of the controlled fund of any given insurer. The move would not have any adverse effect on the financialhealth of the insurer as the insurance companies control sizeable funds. Four years back, IRDA had amended investment norms to forbid an insurer from holding more than a 10% stake in a company. Other steps: IRDA also approved the health insurance regulations to enable a more consumerfriendly system. It has referred the matter to insurance advisory committee to add more clarity onbancassurance regulation. IRDA also gave nod to standard proposal form to record full details of a policyholder as per the KYC norms for sale of life insurance products. Budget Box: Proposal to introduce IIBs Inflation-Indexed Bonds to encourage savings
March 1st, 2013

The Budget 2013-14 has proposed to introduce Inflation-Indexed Bonds or IIBs with the aim to control rising Current Account Deficit, fiscal deficit and inflation. The move by the government has been lauded by the RBI saying that the step is in line with governments commitment to lowering inflation. What are IIBs? Inflation-Indexed Bonds or IIBs are are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment. These bonds will be linked to the inflation index of the country (Wholesale Price Index or WPI) and serve as a better investment option as compared to physical assets like real estate and gold. Higher the inflation, higher the returns. How would IIBs help? As per RBI, IIBs would help in: Boosting domestic savings and reversing the declining savings-to-GDP ratio. Providing households and other investors a competitive option against gold and real estate. In the wake of rising inflation last year, there was considerable flow of investments from financial savings to safe-haven assets like gold that resulted into

higher imports of the metal. This led to current account deficit or CAD widening to 4.9% of GDP at the end of September 2012. Giving investors choice to use IIBs as good hedging instruments against inflation. Budget Box: India to have first public sector Womens Bank
March 1st, 2013

Bank for the women, by the women and to the women To create a level playing field for women in banking sector, an initial capital of Rs 1,000 crore has been committed in the current Budget for the establishment of Indias first public sector Womens Bank by the end of 2013. The proposed bank would lend mostly to women and women-run businesses, support self-help groups and womens livelihood and predominantly employ women. As per RBI, the womens bank would be set up as a PSB and would not require separate guidelines. Currently, there are all-women banks in the co-operative sector. For example, the SelfEmployed Womens Association (SEWA) set up a women -only bank in 1974. The bank is owned by self-employed women as shareholders, and policies are formulated by their own elected board of women workers. Fact Box: Rajat Gupta
February 28th, 2013

Rajat Gupta has been ordered to pay $6.2 million forlegal expenses incurred by his former employerGoldman Sachs during his trial. Rajat Gupta (64) is India-born former Goldman Sachs director who was sentenced to two year last year for insider trading. In US, the banks by laws are required to pay the legal fees of their top Officers and Directors. Before, his trial, Mr. Rajat Gupta entered into a deal with Goldman Sachs that if Rajat Gupta is found guilty for insider trading, he will reimburse entire amount that the Goldman Sachs pays for legal fees incurred. Who is Rajat Gupta and what is the case? Rajat Kumar Gupta, is an Indian American Businessman. He was global head of McKinsey & Company, the management consulting firm from 1994 to 2003 and a business leader in India and the United States. After his rise in McKinsey, he was known as the First India-born CEO of a global corporation. Gupta also chaired as corporate chairman, board director or strategic advisor to a variety of large and notable organizations including Goldman Sachs, Procter and Gamble and American Airlines, and non-profits including The Gates Foundation, The Global Fund and the International Chamber of Commerce. The case: In 2007 when Gupta was Director of Goldman Sachs, he provided confidential information about the companys investment plan and earning details, which are

considered Non-Public information, to RajRajaratnam. He leaked the information of $ 5 billion investment which was to be made by Berkshire Hathaway into Goldman Sachs.Rajaratnamtraded on the information and made profits. It was alleged that Gupta also had some vested interest in Rajaratnam company- Galleon and he also got some benefits through that trading which is considered as Insider Tradinga corporate crime. It was also alleged that Gupta passed on non- public information about Procter & Gamble to Rajaratnam where he leaked info about companys sale of its assets worth $ 3 billion and about its quarterly earnings which were not made public. AmEx unveils ezeClick service
February 24th, 2013

Credit card selling company American Express (also AmEx) has launched a service ezeClick which will enable its customers to carry out online transactions without entering card details. To avail the facility, the AmEx card members need to register just once, create their ezeClick ID and use it for all future online purchases across all participating merchants. NTPL signs pact with banks for 1,000-MW project
February 22nd, 2013

A consortium of banks which includes Bank of India, Indian Bank and Central Bank of India has agreed to lend Rs. 937 crore for the 1,000-MW NTPL power project, a joint venture of the Neyveli Lignite Corporationand the Tamil Nadu Power Generation and Distribution Corporation.The project is being set up at Tuticorin in Tamil Nadu. The project would be taken up at an estimated cost of Rs. 4,909.54 crore. The first unit of 500 MW is expected to start operating in December 2013 and the second unit with the similar capacity would begin operation in March 2014. The power generated from the project would be distributed among Tamil Nadu, Kerala, Karnataka and Puducherry. Fact box: IFRS
March 19th, 2013

Investors prefer accounting levels close to IFRS: Survey Majority of investors want the government to keep national accounting standards as close to the international norms (called IFRS) as possible, says a survey conducted by the global accounting firm Ernst & Young.

What is IFRS ? International Financial Reporting Standards (IFRS): A set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board (IASB).

The rules to be followed by accountants to maintain books of accounts which is comparable, understandable, reliable and relevant as per the users internal or external. What is the need of IFRS? Now, when huge number businesses are going global the international shareholding is also increasing. However, international investors face difficulties in understanding a companys financial statements as companies in different countries follow different kinds of financial reporting standards like the US GAAP which is different from Canadian GAAP. Hence, the need was felt to evolve such standards in the form of IFRS which can even out these disparities across international boundaries.

IFRS was started with an aim to synchronize accountingacross the European Union but the value of harmonization quickly made the concept attractive around the globe. IFRS are sometimes confused with International Accounting Standards (IAS), which are the older standards that IFRS replaced. (IAS were issued from 1973 to 2000). How is IFRS being implemented in India?

India is also gradually trying to comply with IFRS. Indian companies had been till now using the U.S. GAAP (Generally Accepted Principles of Accounting) for reporting financial statements. As per RBI banks were to become IFRS-compliant for periods beginning on or after April 1, 2011. Companies are to comply with the new set of rules in a phased manner. As per the plan IFRS proposed Roadmap for INDIA: Opening balance sheet as at April 1* using IFRS-converged accounting standards. *If the financial year of a company commences n a date other than April 1, then the opening balance sheet needs to be prepared from the beginning of the new financial year of the company. 2011:

NSE NIFTY 50 companies BSE Sensex 30 companies Companies whose shares or other securities listed outside India Companies listed or NOT having a net worth in excess of Rs 1,000 Crore <This excludes insurance companies, banks and non-banking companies (NBFCs)> 2012:

All Insurance Companies 2013:

Companies listed or Not, but having a net worth between Rs 500 Crores and Rs 1000 Crores <This excludes insurance companies, banks and non-banking companies (NBFCs)>

All Scheduled Commercial Banks Urban Co-operative banks having a networth in excess of Rs 300 crores NBFCs Nifty 50 or Sensex 30 NBFCs listed or NOT, but having a networth more than 1,000 Crores 2014:

Listed companies having a networth less than Rs 500 Crores <This excludes insurance companies, banks and non-banking companies (NBFCs)> Urban co-operative banks having a networth between Rs 200 to Rs 300 crores NBFCs (all other Listed) NBFCs (Other Unlisted) haveing net worth between Rs 500 to Rs 1000 Crores. Financial inclusion plan main criteria for getting new bank licences: RBI
March 8th, 2013

The Reserve Bank of India (RBI) has said in its new banking license guidelines that the important criteria for processing the application would be the business model of the applicants and it should provide for financial inclusion.As per these guidelines, new banks are required to establish at least 25% of their branches in places with less than 10,000 population.As per the new norms, private corporates and public sector entities must have 10 years experience to be eligible to apply for new licence. The initial paid-up capital for new banks has been set at Rs 500 crore. SEBI enables two-way fungibility of IDRs
March 6th, 2013

Holders of Indian Depository Receipts (IDRs) will now have an option to convert it into shares of the issuing company. The Securities and Exchange Board of India (SEBI) has issued detailed guidelines which will allow shareholders to convert their depository receipts into equity shares of the issuer company and vice-versa. The issuer could provide exchangeability to IDR holders by converting IDRs into underlying shares; or converting IDRs into underlying shares and selling the underlying shares in the foreign market where the shares of the issuer are listed and providing the sale proceeds to the IDR holders. Existing IDR issuers can follow the new framework, and have to provide the option of redemption/conversion within three months from the date of completing a year of listing. What are IDRs? IDRs are generally instruments denominated in rupees and allow overseas companies to raise funds from the Indian market. How this step would help Indias capital market? This move of allowing for two-way fungibility of IDRs will encourage greater foreign participation in the Indian capital market. So far only the UK-based banking major Standard Chartered PLC was listed as an IDR. Budget Box: Government to infuse Rs 14, 000 cr in PSU banks next fiscal

March 3rd, 2013

In the Budget speech it has been announced that the government will infuse Rs 14,000 crore in public sector banks in next fiscal (2013-14). Objective: To ensure that PSU Banks meet the Basel III regulations regarding capital adequacy. Implementation of Basel III capital regulations envisages enhancing the requirement of core equity capital by banks due to higher capital ratios.The Basel III capital ratios will be fully phased in as on March 31, 2018. The RBI has extended the date for implementing Basel III regulations by 3 months to April 1, 2013. The Government had poured in about Rs 20,117 crore in public sector banks during 2010-11 and Rs 12,000 crore in 2011-12. Budget Box: Banks can sell insurance products of multiple insurance firms
March 3rd, 2013

As per Budget 2013-14, banks will also act as brokers for selling insurance products of multiple companies. More highlights on Insurance sector: Insurance companies will be allowed to open branches in non-metropolitan cities without approval from the insurance regulator. All towns with population above 10,000 will have one Life Insurance Corporation office and one public sector general insurance companys office by 2014. To expedite the settlement of 10 lakh motor third party claims before Tribunals/Courts, insurance companies will organise adalats to settle the claims. Group insurance products will now be offered to groups such as self-help groups, domestic workers associations, among others. There is a proposal to relax the eligibility conditions for life insurance policies issued on or after April 1, 2013 for persons suffering from disability or certain ailments by raising the permissible premium rate from 10% to 15% of the sum assured. Insurance companies will be directly allowed to trade in debt market. It will mean some reduction in costs and may help deepen debt markets. The decision to permit insurance companies to become trading members of debt stock exchanges will curtail the cost for insurers. What is current situation? Currently, banks can sell products of one life, one non-life and a standalone health insurer. The bancassurance guidelines are still under consideration of the Insurance Regulatory and Development Authority (IRDA). Reserve Bank of India (RBI) had recently shown concerns about banks becoming brokers. IRDA passes credit rating norm for choosing foreign reinsurers
April 5th, 2013

Insurance Regulatory and Development Authority (IRDA). As per the IRDA (General Insurance Reinsurance) Regulations 2013, Foreign reinsurers who have a credit rating of at least BBB from Standard & Poors Corp. or an equivalent rating by any other internationalagency for the past five years, can reinsure Indian insurers. In the reinsurance framework, multiple insurance companies share the risk by purchasing insurance policies from other insurers in order to limit the total loss the original insurer would face in the case of a disaster.

What are the Objectives of this move by IRDA ? Increase retention (the portion of risk which an insurer assumes for its own account). IRDA was finding it difficult to track the audit trail of many transactions with regard to reinsurance placements and coinsurance. There was a demand from the general insurers that a level playing field be created for foreign insurance companies and Indian reinsurers. This was because, as yet there have been no restrictions in place for the foreign firms. KYC norms for self-help groups relaxed : RBI
April 1st, 2013

In order to address the difficulties faced by SHGs in complying with Know Your Customer (KYC) norms while opening savings bank accounts and credit linking of their accounts, RBI has held that thebanks can open savings account for the SHG even if know your customer verification is completed for only the office bearers of the SHG. Thus, it has been decided to simplify certain norms for SHGs. Thus, it will not be mandatory for the banks to complete the KYC of all members of the SHG before opening a bank account, rather now, verification can be completed only for the office bearers of the SHG. Also, as the banks would have already completed the KYC norms for the SHG while opening SHGs bank account, there would be no need for a separate KYC verification while giving credit to the SHGs. Take firm steps to recover loans of sick firms from affluent promoters: FM to Banks
March 28th, 2013

Sending out warning to willful defaulters, Finance Minister P. Chidambaram asked banks to take bold steps against affluent promoters to recover loans from sick companies owned by them. The warning comes in the backdrop of several entities, includingVijay Mallyas Kingfisher Airlines, being unable to repay bank loans. Gross NPAs of PSU banks have grown from Rs.71,080 crore as on March, 2011, to Rs.1.55 lakh crore as on December, 2012, of which corporate accounts constitute 53.68%.

Of this, about 172 corporate accounts are NPAs of more than Rs.100 crore at the end of December, 2012. The amount involved in such cases is to the tune of Rs.37,194 crore. As many as 215 projects with an investment of Rs.7 lakh crore were now postponed and banks had distributed about Rs.54,000-crore in loans towards them. RBI slashes repo rate by 25 bps, no change in CRR
March 20th, 2013

The Reserve Bank of India (RBI) has cut down repo rate by 25 basis points from 7.75% to 7.5% with immediate effect. As a result, The reverse repo rate stands adjusted to 6.5%. The marginal standing facility (MSF) rate and the Bank Rate adjusted to 8.5% . The Cash Reserve Ratio (CRR) has been left unchanged at 4%. As per the central bank, high Current Account Deficit (CAD) and inflationary pressure limit possibility of further relaxing of rates. SEBI issues framework for colour coding, product labelling for mutual funds
March 20th, 2013

With the aim to inform investors with the amount of risk involved in various mutual funds scheme, market regulator- the Securities and Exchange Board of India (SEBI) has issued guidelines on product labelling with colour coding for mutual funds. The guidelines would be effective from July 1, 2013, for all existing and forthcoming schemes, Securities and Exchange Board of India (SEBI). As per the norms: The front page of initial offering application forms will carry product labels with details about the schemes. The labels would have to be placed in common applications forms and advertisements. Color and Risk Blue colour : Low risk Yellow color : Medium risk Brown color: High risk Labels would include details about the nature of schemes such as to create wealth or provide regular income in an indicative time horizon(short/ medium/ long term). Mutual funds should give a brief about the investment objective in a single sentence followed by kind of product in which investor is investing(equity or debt). Mutual funds would have to include a disclaimer that investors should consult their financial advisers if they are not clear about the suitability of the product.

Estimated GDP Growth at 5.7% for 2013-2014 RBI

May 4th, 2013

The RBIs has projected a GDP growth for 2013-14 at 5.7% as against finance ministrys projection of 6.1%- 6.7%. Indian economy grew by 5% in 2012-2013 on account of poor performance of manufacturing,agriculture and services sector. RBIs current assessment is that economic activity will remain subdued and will only show a modest pick-up in second half of 2013-14, subject to appropriate conditions in the later part of year. Assumptions for calculating growth rate Agricultural Sector: Normal monsoon and agricultural growth are expected to return to trend levels in second half of 2013-14. Industrial & Service Sector: Growth outlook expected to be subdued primarily due to: Decline in new investment Existing projects stalled by bottlenecks and implementation gaps Sluggish growth in services and exports driven by bleak global sentiments. NABARD opens first Farmers Club in Kargil
April 30th, 2013

Kargil got its first FarmersClub, as NABARD inaugurated Trespone Farmers Club at Trespone TSG Block in the district. What is Farmers Club (FCs) ? Farmers Clubs (FCs) are grassroot level informal forums of farmers. Such Clubs are organized by rural branches of banks with the support and financial assistance of NABARD for the mutual benefit of the banks concerned and the village farming community/rural people. With the enhancement of the programme, other agencies like NGO, VAs, KVKs, SAUs etc. are also now included as agencies included in the formation and promotions of FCs. Background: The Farmers Clubs programme which was earlier known as Vikas Volunteer Vahini (VVV) Programme was launched by NABARD in 1982. The programme was directed towards development in rural areas through credit, technology transfer, awareness and capacity building. The VVV Programme was renamed as Farmers Club Programme in 2005 by revisiting its earlier mission. What is the need of Farmers Clubs? Around 60% of countrys population depends on agriculture which contributes18% to Indias GDP. The Tenth Five Year Plan and National Agriculture Policy documents envisage a growth level of 4% in Agriculture. However the growth of the sector has not been satisfactory with less than 2% growth in the last 50 years. To meet the targeted

growth it is imperative improve productivity and reduce costs by improving efficiency. Keeping that in mind NABARD devised FCs strategyto provide package of initiatives for transfer of technology, improving input use efficiency, promoting investments in agriculture both in private and in public sectors and creating a favourable and conducive economic environment. The emerging needs in agriculture sector now are adoption of location specific skill and knowledge based technologies, promote greater value addition to agriculture produce, forge new partnerships between public institutions, technology users and the corporate sector, harness IT more effectively to realize financial sustainability and compete in the international market. Who can form FCs? All Institutional Agencies (Commercial Banks, Cooperative Banks and Regional Rural Banks) and all grassroot level organisations (NGOs, PRIs, State Agricultural Universities, KVKs, ATMA, Post Offices etc.) are eligible to form Farmers Clubs. What are the functions of FCs? The broad functions of the Farmers Clubs are: Coordinate with banks to ensure credit flow among its members and forge better bank borrower relationship, Organise minimum one meeting per month and depending upon the need, there would be 2-3 meetings per month. Non-members can also be invited to attend the meetings, Interface with subject matter specialists in the various fields of agriculture and allied activities etc., extension personnel of Agriculture Universities, Development Departments and other related agencies for technical know how upgradation. For guest lectures, even experienced farmers who are non members from the village/ neighbouring villages could be invited, Liaison with Corporate input suppliers to purchase bulk inputs on behalf of members, Organise/facilitate joint activities like value addition, processing, collective purchase of inputs and farm produce marketing, etc.; for the benefit of members. They can also sponsor / organise SHGs, Undertake socio-economic developmental activities like community works, education, health, environment and natural resource management etc. Market rural produce and products How a bank is benefitted by opening FCs? FCs concept is a win-win situation for both the banker and the borrower. As per a study, the following benefits were accrued to a bank branch operating FCs: Increase in deposits. Increase in the credit flow and diversification of lending. Generation of new business avenues. Increase in the recoveries and decline in the non-performing assets. Reduction in the transaction costs of financial institutions/ Banks. Socio economic development of the village. Besides these benefits to the banks, the Farmers Club has also been instrumental in certain social welfare measures like free eye check-up camp, Animal Health Care

Camp, Mass vaccination camp, community works like road, check-dams, afforestation, etc. Enhancement in bargaining power for bulk purchase of inputs and marketing of their produce. How NABARD supports FCs? NABARDs policy support for Farmers Club Programme lays stress on linking technologies with farmers club members and also facilitating market access through the following mechanism:

Capacity building of members of Farmers Clubs including leadership training. Linkage with technology/markets Self Help Groups (SHGs)/Joint Liability Groups (JLGs) formation Forming Federations of Farmers Clubs/Producers Groups/Companies Financial Support from NABARD

NABARD also provides financial assistance of Rs.10,000/- per club per annum for a period of 3 years to all agencies irrespective of whether they are institutional or other agencies and also the region concerned. What is the current status of FCs?

During 2009-10, 16,590 Farmers Clubs have been formed taking the cumulative number of farmers Clubs to 54,805 as on 31st March 2010. RBI to start plastic money project on trial basis
April 20th, 2013

Deputy Governor, RBI, K. C. Chakrabarty held that the RBI is probable to commence the introduction of plastic notes in select parts of India on a trial basis and it would commence with the introduction of Rs.10 denomination and continue with other small denominations. Plastic notes can withstand more wear-and-tear than their paper counterparts Have a longer life than paper counterparts Plastic notes are more difficult to fake and could therefore be a means of countering counterfeiting. Important Updates
April 8th, 2013

S. Gopalakrishnan new head of CII S. Gopalakrishnan, Co-Founder Infosys elected as new President for Industry body Confederation of Indian Industry (CII) for 2013-14. S. Gopalakrishnan will replace Adi Godrej, Chairman of Godrej Group. Krishna Kumar is new ED of Canara Bank

V. S. Krishna Kumar took charge as the ED (Executive Director) of Canara Bank with effect from April 4, 2013. India and Singapore ink MoU on Air Services India and Singapore inked a new Memorandum of Understanding (MoU) on bilateral air services. The MoU rationalizes the capacity entitlements of both India and Singapore in terms of seats per week in each direction with a route specific cap for Singapore on each route. The MoU increases by 10%, the capacity entitlement with India. Reconstitution of Central Press Accreditation Committee Central Press Accreditation Committee (CPAC), reconstituted by the Ministry of Information & Broadcasting. Function of CPAC: To approve applications for accreditation from the media, both Indian as well as foreign. Jammu and Kashmir Bank wins FE Indias Best Banks Award-2012-13 In recognition of its strong fundamentals and dynamic growth model, J & K Bank won the prestigious FE Indias Best Banks Award for 2012-13. Ranked as No. 1 in Best Old Private Sector Bank category 3rd in the overall banking industry in terms of Profitability. 1st in terms of Profitability in the category of Old private sector banks. Fact Box: Caratometer ( Karatmeter )
April 6th, 2013

Corporation Bank to use caratometers in order to check purity of Gold pledged Corporation Bank planning to use cartometers in order to check the purity of Gold pledged. Corporation Banks gold loan portfolio more than doubled to Rs 3,662 crore as of December 2012 from Rs 1,585 crore as at December 2011. To encourage boost agriculture lending, the Corporation bank has opened gold loan shoppe at 7 places. Karatmeter (also spelt as caratometer): A scientific and non-destructive method for testing the purity of Gold. Internationally used device. Used as a confirmatory test (after the assayer gives his report on the quality of gold), thus assuring the purity of gold pledged with the bank by borrowers. Uses X-rays to give an exact reading of the purity of gold in about 3 minutes. However, it only checks the purity of the gold on the top layer. Most showrooms across India use it. Other ways to determine the gold content include melting Gold down, the touchstone method or XRF (x-ray fluorescence) method. Finance Ministry appoints auditors without consulting RBI

May 22nd, 2013

Deviating from the earlier practice of consulting the RBI while appointing auditors for the same, the government has appointed auditors for the Reserve Bank of India after consulting with the Comptroller & Auditor General (CAG). As per government, this has been done to avoid conflict of interest. The RBI and the finance ministry appeared to have some friction over many issues in recent months, particularly over the conduct of monetary policy with senior ministry officials often seemingly dissatisfied over the pace of interest rate cuts by the central bank. There is also a less high-profile conflict over dividends declared by RBI out of its profits. However, the government maintained that there is no relation of appointing auditors to dividends. In the 2013-14 budget, the government has assumed 43,996 crore in dividends from the Reserve Bank of India and state-run banks, a sharp increase from 25,447 crore the year before. The government expects RBI to pay it more dividends. What the Finance Ministry is asking RBI to do?

Fin Min wants RBI to pay the government more in dividends. It is also asking the RBI to interests to the banks on the CRR it keeps with itself. After RBI indicated its inability to pay interests, finance ministry has been reviewing RBIs balance sheet over the past year. The ministry had suggested that RBI should pay 7% interest on the CRR. As per ministry this step would help slash rates even if the central bank does not ease monetary policy. It had argued that major central banks either do not mandate a reserve ratio or pay interest on the mandatory reserves they ask banks to set aside. How does the mechanism? appointment of auditors take place under the existing

Under the existing mechanism for the appointment auditors, the CAG provides a list of CA firms eligible for appointment as statutory central auditors. In case of RBI, two central auditors and four local auditors were being appointed by the finance ministry in consultation with RBI. RBI directs banks to adhere to Clean Note Policy
May 18th, 2013

The Reserve Bank of India, under its Clean Note Policy, has directedbanks to eliminate stapling of note packets and issue only clean currency notes to the public. What is Clean Note Policy? Clean Note Policy is a policy being run by the RBI with an objective to give the citizens good quality currency notes and coins, while the soiled notes are withdrawn out of circulation. Under this policy Banks have been directed the following: Stop stapling of note packets and instead secure note packets with paper bands. Sort notes into re-issuables and non-issuables. Issue only clean notes to public.

Stop writing of any kind on the watermark window of bank notes. As per RBI, on an average, one out of five paper notes in circulation (over 20%) is disposed every year after getting soiled and the number of such soiled currency bills stood at over 13 billion units during the fiscal ended March 31, 2012. RBI will launch a pilot project for plastic or polymer currency notes with an aim to enhance the shelf-life of notes. Fact Box: Inflation Indexed Bonds (IIBs)
May 18th, 2013

RBI to launch Inflation Indexed Bonds in June 2013 As stipulated in the Budget 2013-14, the government, in consultation with the RBI, has decided to launch Inflation Indexed Bonds (IIBs) to wean away investors from the yellow metal (Gold) to paper-based savings instruments. This new investment instrument with provide an alternative for those who were in recent times going in for investment in gold as a hedge against inflation. IIBs with a maturity period of 10 years will be launched each month by RBI with the objective of diverting household savings from gold into these hedged bonds up to Rs.15,000 crore this fiscal. For appropriate price discovery and market development the IIBs will also be auctioned to institutional investors such as Pension Funds, Insurance, and Mutual Funds as it will create demand for IIBs and help in making them tradable in the secondary market. What are IIBs? Inflation-Indexed Bonds or IIBs are are bonds where the principal is indexed to inflation. They are thus designed to cut out the inflation risk of an investment. These bonds will be linked to the inflation index of the country (Wholesale Price Index or WPI) and serve as a better investment option as compared to physical assets like real estate and gold. Higher the inflation, higher the returns. Why this step? The step is being taken to de-motivate investments in gold as bulging imports of the yellow metal has been adversel y affecting the countrys Current Account Deficit (CAD), which had surged to a historic high of 6.7% in the third quarter of 2012-13. Last month, imports of gold and silver soared by 138% on an annual basis to $ 7.5 billion. How would IIBs help? As per RBI, IIBs would help in: Boosting domestic savings and reversing the declining savings-to-GDP ratio. Providing households and other investors a competitive option against gold and real estate. In the wake of rising inflation last year, there was considerable flow of investments from financial savings to safe-haven assets like gold that resulted into higher imports of the metal. This led to current account deficit or CAD widening to 4.9% of GDP at the end of September 2012.

Giving investors choice to use IIBs as good hedging instruments against inflation. How will the Index ratio be determined? The IR (index ratio) will be computed by dividing reference index for the settlement date by reference index for the issue date, and the final inflation data based on the Wholesale Price Index (WPI) will be used for providing inflation protection. Besides, in case of revision in the base year for WPI series, base splicing method would be used to construct a consistent series for indexation. The conflict b/w International Olympic Committee (IOC) and the Indian Olympic Association (IOA) is expected to end soon with both the Indian representatives from the government and sports bodies reached an agreement in a meeting with IOC officials. The IOC has agreed to lift the ban on IOA once it holds fresh election as per the amended constitution of the IOA. What is the issue? The membership of the IOA was suspended in December 2012 owing to differences in election procedures of IOA administration body. IOC wanted that election for top posts of IOA to be held as per Olympic Charter, which insists that organizing committees for each country remain autonomous and free of government influence. But Indias national sports code does not adhere to these requirements, and consequently, a New Delhi court ordered the IOA to hold an election as per governments sports code instead of adhering to the IOCs charter. What is the solution reached? The IOA has acquiesced to the demand of IOC to amend its constitution in line with the governments Sports Code. Following this a fresh election will be held for top administrative posts of IOA. Government to set up Financial Stability and Development Council (FSDC)
May 15th, 2013

The Central Government is at consensus to establish Financial Stability & Development Council (FSDC) to strengthen and institutionalize the mechanism for maintaining financial Stability and Development. What would be the role of FSDC? FSDC will perform following role: To engage in macro prudential supervision of the economy, including the functioning of large financial conglomerates and address inter-regulatory coordination issues. To focus on financial literacy and financial inclusion. To periodically look into issue relating to financial development. Who would be the head of the Council?

The Council would have one Sub-Committee which would be headed byGovernor, RBI. The Secretariat of the Council would be in theDepartment of Economic Affairs, Ministry of Finance. RBI eases rates, trims repo rate by 25bps to 7.25%
May 4th, 2013

RBI reduced the Repo Rate (the rate at which RBI lends money to commercial banks), to 7.25% from 7.5% while keeping the CRR (Cash Reserve Ratio- the portion of deposits that banks require to maintain with RBI) unchanged at 4%. Monetary Measures Repo rate: reduction by 25 bps from 7.5% to 7.25% Reverse repo rate: 6.25% (100 bps below repo rate) MSF (Marginal Standing facility) rate: 8.25% (100 bps above repo rate) Bank rate: 8.25% Cash reserve ratio retained at 4% of NDTL (Net Demand and Time Liabilities) Impact of repo rate cut: Reduced cost of overnight borrowing for commercial banks from RBI. Lead to reduced lending rates, helping in better macroeconomic sentiments. RBI has invoked banks to pass the impact of above to end users as banks hold to factor the benefit. Why a Need of reduction in repo rate ? In order to continue to address risk towards growth. Insistence by Government and industry to lower borrowing costs to spur economic growth, estimated to have slumped to 5% in the year ended March 31, 2013. Guard against the risks of inflation pressures re-emerging and adversely affecting inflation expectations. Manage liquidity to ensure adequate credit flow to the productive sectors of the economy. Fact Box: Indian Banks Association (IBA)
June 7th, 2013

K R Kamath re-elected as IBAs Chairman K R Kamath, the chairman and managing director of Punjab National Bank (PNB), has been re-elected as the Chairman of the Indian Banks Association (IBA) for 2013-14 tenure. Indian Banks Association (IBA) Established on September 26, 1946. It is an association of Indian banks and financial institutions. It is based in Mumbai. Currently represents a total of 173 banking companies which are operating in India.

Objective: Strengthening, development and coordination of the Indian banking. It also facilitates various member banks. The Managing Committee of the IBA consists of a chairman, three deputy chairmen, one honorary secretary as well as 26 members. IndusInd Bank ties up with American Express to launch credit card for affluent customers
June 2nd, 2013

IndusInd Bank has joined hands with American Express to unveil IndusInd Bank Iconia American Express Card for its rich customers. Card Benefits The card offers its customers reward golf, entertainment, travel and dining. points and lifestyle benefits such as

Subscribers of the card will get a reward of 1.5 point on weekdays and of 2 points on the weekends on every Rs 100 they spend. These points can then be redeemed for cash credit at full value, i.e, a rupee for each reward point and for partner air miles. IndusInd Bank ventured into the credit card sector after acquiring Deutsche Banks loss making credit card business from its Indian operations in 2011. RBI notifies restrictions on bank loans against Gold
May 31st, 2013

Taking further measures to curb the expanding Current Account Deficit (CAD) and forex outflow, the RBI has imposed restrictions on banks and NBFCs for providing loans against purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold ETF and units of gold Mutual Funds to discourage demands for gold. Banks have also been directed to ensure that the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the board approved limit. However , Banks are allowed to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these will weigh much more, thereby circumventing the RBIs guidelines regarding restrictions on grant of advance against gold bullion. Current Status: At present, banks are allowed to provide advances against gold ornaments and other jewellery and against specially minted gold coins sold by banks. However, no advances can be granted by banks for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds. Why this measure? India is one of the largest importers of gold. In the last few years, India has witnessed a sharp rise in the demand as well as in the prices of gold which has in turn led to bigger imports. As the imports are generally paid in dollars/ foreign currency, it has led to massive outflow of foreign exchange reserves leaving a huge CAD. CAD occurs when a

countrys total imports of goods, services and transfers are greater than the countrys total export of goods, services and transfers. This situation makes a country a net debtor to the rest of the world. Very high CAD is detrimental to the outlook of the whole economy of the country. Government has taken several steps recently, including raising import duty, to curb the inbound shipments of gold. RBI too had put restrictions on banks on gold imports. SEBI to double charges for Algorithmic (Algo) trading
May 23rd, 2013

Market regulator SEBI has announced that it will double the charges for orders based on Algorithms (algo) in stock exchanges from May 27, 2013. What is Algo Trade? Algorithmic (Algo) trading refers to orders generated by use of advanced mathematical models that involve automated execution of trade. It is mostly used by large institutional investors and has raised concerns that algo exposes small investors to possible systemic risks. Charges on an algo trade vary among exchanges. Why SEBI is increasing the charges on Algo trade? Algo trading method is mostly used by large institutional investors and has raised concerns that algo exposes small investors to possible systemic risks. The move to increase the algo trade charges is intended to disincentivise those having high order-to-trade ratio using algo. Brokers with repetitive instances of high daily order-to-trade ratio will face additional penalty in the form of suspension of their proprietary trading book. Shashi Kant Sharma sworn-in new CAG
May 23rd, 2013

The President of India has appointed Shashi Kant Sharma, IAS, as Comptroller & Auditor General of India, in terms of Article 148 (1) of the Constitution of India. Sharma (61) is a 1976 batch Indian Administrative Service (IAS) officer of the Bihar cadre and was before serving as secretary in the Ministry of Defence. Sharma succeeds Vinod Rai whose audit reports on 2G spectrum and coal block allocations during triggered a number of controversies and brought in the concept of presumptive loss in audit. The CAG has tenure of 6 years, or till the incumbent is 65, whichever is earlier.

What is the controversy over appointment of Shashi Sharma as CAG ? Mr. Prashant Bhushan (Aam Aadmi Party leader and a Supreme Courtlawyer) objected Sharmas appointment as the CAG, terming it illegal and unconstitutional. Mr. Prashant Bhushans laid the contention was that Sharma in the last 10 years held many sensitive positions in the defence ministry that dealt with procurements and his appointment as the CAG would mean a conflict of interest as he will be auditing defence deals in which he had a role as defence secretary. A public suit has also been filed in the Supreme Court challenging Sharmas appointment as the CAG. Railways to launch Mobile Payment Ticketing Facility
June 13th, 2013

Soon, passengers will be able to book their train tickets via mobile SMS as Indian Railways is to start Mobile Payment Ticketing Facility from July 1, 2013. The service will be available to all mobile subscribers. This facility offered by irctc, will have no role of travel agents and commercial organisations. Only individual users will be allowed to book on the portal. Travel agents in the IRCTC service have been accused of blocking tickets to sell them at a premium. How to book the ticket? A passenger has to type the train number, destination, journey date, class and passenger details like name, age and gender on the SMS box. For starting, one has to register their mobile number with IRCTC as well as their bank. The bank provides MMID (Mobile Money Identifier) andOTP (One Time Password) for payment authorization. The sender will receive transaction ID and then make payment through sending another SMS by typing PAY followed by the transaction ID, MMID as received from the bank and password, thus the booking is complete. Charges: The service will be available to all mobile subscribers and Rs 3/- will be charged per SMS and payment gateway charges will be Rs 5/- for ticket amount upto Rs 5,000 and Rs 10/- for more than Rs 5,000. Banks to audit documents of credits of Rs 5 Crore and above periodically: RBI
June 11th, 2013

As per the directions made by RBI, Banks will have to do periodical audits and reverification of the documents of all credits of and above Rs 5 crore, till the loan is completely repaid. The instructions have been made in order to check frauds. As notified by the RBI, the banks should provide quarterly review notes of such audits that include information like number of accounts where rectification is required, list of deficiencies observed by auditors and steps taken to rectify the deficiencies. The direction came up after RBI found a large volume of frauds at the time when the branches of banks were under concurrent audit. The bank found that frauds were perpetrated on account of the submission of forged documents of the borrower, which were certified by advocates/chartered accountants/valuers. RBI imposes restrictions on gold loans by Co-op banks
June 10th, 2013

Intensifying the efforts to discourage the demand for gold, the Reserve Bank of India has extended the restriction on advance against gold on co-operative banks as well. RBI has directed state/central co-operative banks to ensure that the weight of the specially minted gold coin(s) for which they are granting advance does not exceed 50 grams per customer. Also the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the Board approved limit. Similar limitations are already in force on commercial banks. Recently, the government raised import duty on gold to 8% from 6%. Banks have also been advised not to sell gold coins. RBI has also imposed restrictions on gold imports by banks. The increasing imports of the yellow metal has become a cause of concern for both the government as well as the RBI as it putting pressure on the CAD (Current Account Deficit), which is likely to be around 5% of the GDP in 2012-13. The monthly average of gold import in 2012-13 was 70 tonnes. The rise in gold import is also linked to the fall in its prices in the internationalmarket. Fact Box: e-BRC (Bank Realization Certificate)
June 8th, 2013

MoU inked b/w DGFT and Government of Delhi to use e-BRC (Bank Realization Certificate) An MoU was signed b/w the Directorate General of Foreign Trade (DGFT) and Commissioner (Trade and Taxes) and Government of NCT of Delhi for making use of electronic Bank Realization Certificate (e-BRC). With this, Delhi has become the second state to sign the MoU. The first state to sign this MoU was Maharashtra. What is e-BRC? e-BRC is electronic form of earlier physical Bank Realization Certificate. It was launched in 2012 by thethe Directorate General of Foreign Trade (DGFT) to reduce transaction cost to exporters, who will not be required to make any request to bank for issuance of bank export and realisation certificate (BRC). BRC is issued by a bank after realization of export proceeds in the country. It is an important document required for claiming benefits under various Foreign Trade Policy schemes. In addition, BRC data is used by VAT, Income Tax and Drawback departments. Finance Ministry asks IBA to set up independent body to oversee CDR mechanism
June 8th, 2013

The Indian Banks Association (IBA) has been asked by the Finance Ministry to set up an independent body to oversee the Corporate Debt Restructuring (CDR) mechanism. The step has taken after witnessing a surge in the number of debt restructurings over

the past two years. Both the IBA and the finance ministry has expressed concern that banks and their clients are taking undue advantage of the CDR mechanism, deferring the issue of Non-Performing Assets (NPA) formation. Under CDR, there were 106 cases of restructured loans, of Rs 76,470 crore, in 2012-13. This was a rise from 50 cases (exposure of Rs 39,600 crore) the previous year. The Independent Body: The independent oversight mechanism will not have any government representative or any serving banker but some experts who will scrutinize from the correctness point of view whether the case referred is genuine. The committee will act as an advisory body which will help the banks examine a particular case and it will not be mandatory for a bank to go to the committee. The finance ministry has been asking banks to deal strictly with wilful defaulters and to become more aggressive on loan recovery. The Reserve Bank of India has also made the debt recast norm tougher. It has said all loans to be restructured after April 1, 2015, should be classified as NPA.