Financial Awareness Capsule Sbi Po

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in

FINANCIAL AWARENESS FOR SBI PO EXAM
Specially compiled for Bankersadda by Mr. A.K. Gupta, Ex Chief Manager, PNB

NOV 2013

1. Appointments: Arundhati Bhattacharya takes over
as Chairman of SBI and becomes first ever woman to
head SBI in 206 years. S R Bansal, has taken over as
Corporation Banks CMD.
2. LIC gets its first woman MD: The government has
appointed Usha Sangwan, executive director
(corporate communication) at LIC and V K Sharma,
MD and chief executive officer of LIC Housing
Finance, as the two new MDs. According to the
norms, LIC can have four MDs, and a chairman, as
part of its top management. LIC is Indias largest
insurer, with 83 per cent market share in terms of
the number of policies, and 71 per cent in premium.
3. Forex reserves rise $1.83 bn in a week: Forex
reserves rose to $282.95 billion in the week ending
October 25.
4. Jignesh Shah quits MCX board, pre-empts FMC
action: Jignesh Shah, the founder-chairman of
Financial Technologies (FT) who resigned from the
MCX-SX board, quit the board of Multi Commodity
Exchange of India (MCX) as well. The resignation
follows the Rs 5,600-crore payment crisis at NSEL,
also controlled by FT.
5. Sept core sector growth signals infra recovery: In
early signs of industrial recovery, data for the eight
core sector industries growth in September 2013,
showed a years high of eight per cent, against 3.7
per cent in August. In the same month last year, the
core sector had recorded 8.3 per cent growth, the
highest since January 2009-10. The core sector
contributes around 37 per cent to the Index of
Industrial Production (IIP).
6. April-Sept fiscal deficit touches 76% of Budget
estimate: According to data released by the
Controller General of Accounts, at Rs 4.12 lakh
crore, the fiscal deficit for the first six months of
2013-14 was 76 per cent of the BE of Rs 5.43 lakh
crore. For the corresponding period last year, the
deficit stood at 65.6 per cent of the BE.

7. 'Sakala' to cover more services: 'Sakala',
Karnataka government's innovative scheme, which
promises timely delivery of government services to
citizens, will be expanded to cover more services
under various departments. The scheme that has
been lauded for bringing transparency and
accountability in the system, presently covers over
375 services of 42 departments and organisations of
the state government.
8. Karnataka to build 10,000 playgrounds in
villages: The project, under which two playgrounds

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will be built in each Panchayat, will be taken up with
the cooperation of the Departments of Revenue,
Education and Sports.
9. State Bank cuts short-term bulk deposit rate as
liquidity eases: State Bank of India, the countrys
largest lender, has reduced short-term bulk deposit
rate by 200 basis points. SBI will offer 6.5 per cent
for deposits of Rs 1 crore and above, for seven to 60
days maturity, as compared to 8.5 per cent offered
earlier.
10. Parikh panel for Rs 5 hike in diesel prices: The Kirit
Parikh committee, asked to revisit the pricing
methodology of petroleum products, has
recommended to the government an increase of Rs 5
a litre in diesel, Rs 250 a cylinder in LPG (cooking
gas) and Rs 4 a litre in kerosene with immediate
effect. It also suggested a cap on diesel subsidy by
oil marketing companies (OMCs) at Rs 6 a litre,
which along with the rise it recommends would
collectively save at least Rs 40,000 crore of the
governments subsidy burden. It also recommended
to cap subsidised cylinders to each household at 6
from 9 now.

11. Wheat export floor price cut by $40/tone: To enable
swifter movement of wheat stocks from state
warehouses, the Union Cabinet has decided to
reduce the export floor price from $300 a tonne at
present to $260 a tone and to allow export till June
31, 2014, instead of March 31, 2014.
12. Allahbad Bank not to accept deposits from
public under West Bengals 'Safe Savings
Scheme': WBIDFC, a financial services company
promoted by the state government of West Bengal,
has come out with a scheme for deposits with a
minimum amount Rs 1,000. The money can be kept
for 12-60 months and will earn 9.00-9.25 per cent
interest per annum. The scheme has been launched
to offer a secured savings option to rural people in
the state, who are often cheated by illegal deposit
schemes promoted by swindlers.
13. RBI prescribes Rs 500-cr initial capital for
foreign bank subsidiaries: Foreign banks seeking
to set up subsidiaries in India would need at least Rs
500 crore as initial paid-up voting equity capital or
net worth. Though foreign lenders would be
incentivised to convert their branches here into
wholly-owned subsidiaries, subsidiarisation
wouldnt be mandatory. The wholly-owned
subsidiaries of foreign banks would be given near-
national treatment, including for the opening of
branches. As of March, 43 foreign banks operated in
India, through a network of 333 branches; and, 47
foreign lenders were present in through
representative offices. According to its
commitments to the World Trade Organization,
India has to allow 12 new foreign bank branches in a
year.
14. RBI to launch inflation-indexed securities: RBI is
set to launch two new instruments by the end of this
year inflation-indexed national saving securities
(IINSSes) and cash-settled 10-year interest rate
futures (IRFs). However, the 10-year inflation-
indexed bonds launched earlier this year, which
were linked to the Wholesale Price Index, had failed
to attract much interest from investors.
15. RBI shuts special liquidity window for mutual
funds: RBI has closed the special window for banks
to meet the cash requirements of mutual funds
(MFs). It had opened this window in mid-July to help
MFs meet sharp redemptions in fixed income
schemes, after RBI's move to make it more
expensive for participants to borrow short-term
money. The special repo window allowed banks to
borrow a total of Rs 25,000 crore at 10.25 per cent
for MFs.
16. Reserve Bank expects trade deficit to moderate
in Q2: Indias CAD widened from 3.6 per cent of
gross domestic product (GDP) in the fourth quarter
of 2012-13 to 4.9 per cent of GDP in the first quarter
of 2013-14. Inflows from foreign institutional
investors, which had turned negative since end-May,
reversed in September. Since the introduction on
September 10 of the swap facility for foreign
currency non-resident account (banks) or FCNR(B)
deposits and bank foreign borrowings, $6.9 billion
and $4.4 billion had been received under the
respective schemes until October 25.
17. FinMin relaxes norms for CMD jobs in PSBs:
Executive directors (EDs) appointed merely a couple
of months earlier would now be allowed to appear
in the interviews. Earlier, one needed to have
completed a year as ED. However, the criteria for
residual service of two years of a candidate hasnt
been changed. A selection committee headed by RBI
Governor will interview 19 EDs of various PSBs for
six positions that will become vacant in the next
financial year, 2014-15. In the present financial year,
chairmen of four PSBs will retire. The government is
yet to fill vacancies in two, Andhra Bank and Bank of
Maharashtra, where the chairman had retired in the
past couple of months.
18. Gold smuggling surges with govt's import curbs:
Gold worth Rs 130 crore was seized from 383 cases
in April-September against Rs 28 crore from 339
cases in the year-ago period, an increase of 360 per


cent in value terms. In volume, it went up from 99 kg
to 500 kg in the first half.

19. World Bank slashes GDP growth forecast to
4.7%: The Bank also pegged the current account
deficit (CAD) at 4.1 per cent of GDP in 2013-14,
significantly higher than the 3.7 per cent hoped by
the ministry. The Bank believes the RBI should
probably look at core or manufactured product
inflation, rather than food inflation, to decide on its
monetary stance. The International Montery Fund,
had projected GDP to grow 4.25 per cent in FY14.
The Prime Minister's Economic Advisory Council
(PMAEC) had cut India's growth forecast to 5.3%
from its earlier projection of 6.4% for the current
financial year. The finance ministry too expects the
economy to grow above the 5%. The Planning
Commission expects India's economy to clock a
growth rate of 5.3 per cent for the current financial
year, a shade higher than a decadal low of five per
cent in the previous year.
20. India may use forex reserves to finance CAD:
According to World Bank, India may have to dip into
its foreign exchange reserves to finance the current
account deficit (CAD) in 2013-14 but the reserves
would still amount to a comfortable import cover of
approximately five months.
21. FinMin asks ministries to buy tickets from Air
India directly: The move is part of government's
austerity measure to restrict the fiscal deficit to the
budgeted figure of 4.8% of GDP in 2013-14.
However, if it is not possible to obtain tickets
directly from Air India/Airlines counters, they may
obtain the services of three authorised travel agents
-- Balmer Lawrie & Company (BLCL), Ashok Travels
& Tours (ATT) and Indian Railways Catering and
Tourism Corp (IRCTC).
22. Centre eases eligibility criteria for UMPPs: For
setting up ultra-mega power projects (UMPPs), the
capital cost requirement for UMPPs used to be 10
per cent of the overall project cost and earlier norms
took into account expenditure by prospective
developers over five years. Now, the total capital
cost requirement, has been brought down to five per
cent of the overall project cost and the expenditure
incurred by the companies on projects in the past
seven years will be counted.
23. End of the road for tax breaks: Union Commerce
Minister Anand Sharma has said that the centre
would announce a new package without tax
incentives for Uttarakhand and Himachal Pradesh.
The tax breaks in these states expired on March 31,
2010.
24. E-KYC to be accepted for verification: As per
IRDA, the e-KYC (electronic know-your-customer)
services operationalised by the Unique
Identification Authority of India (UIDAI) will be
accepted as valid KYC process for insurance. Earlier,
a letter issued by the UIDAI containing details such
as name, address and Aadhaar number was a valid
document for customer identification.
25. 25 mn small borrowers' data now a click away:
Equifax Credit Information Services and High Mark
Credit Information Services are the two credit
bureaus that collate data from MFIs. So far, details of
100 million loan accounts belonging to 25 million
individual customers have been collected. These
loan accounts have a gross loan portfolioof Rs
21,300 crore as of June. The data thus collected is
used to assess over-indebtedness and instances of
multiple lending among borrowers. According to
RBI norms, not more than two MFIs or non-banking
finance companies should lend to the same
borrower with an individual cap of Rs 50,000.

26. RIL first Indian private sector firm to clock Rs 1-
lakh-cr sales in a quarter: Reliance Industries
became the first private sector company in the
country to achieve quarterly turnover or sales of
more than Rs 1 lakh crore in a quarter. Its turnover
during the quarter stood at Rs 1,06,523 crore,
against Rs 93,266 crore in the previous quarter.
27. To unlock FDI, govt to ease lock-in period for
realty: Foreign real estate developers, investing in
Indias construction sector might be allowed to exit
before the mandatory three years stipulated at
present. However, for that, they would have to
complete the project and procure completion
occupancy certificates from local authorities. India
allows 100 per cent FDI through the automatic route
in townships, housing, built-up infrastructure and
construction-development projects.
28. Economy moving towards stagflation: CII survey
of CEOs has indicated the economy was moving
towards stagflation. Stagflation refers to a situation
where economic growth is too low and inflation is
too high, leading to high unemployment levels. The
situation indicates a dilemma for policymakers,
since actions designed to cut inflation may aggravate
unemployment.

29. Government lists draft rules to implement Land
Acquisition Act: The rules are with a focus on
consent and social impact assessment to ensure the
rights of the farmers were protected when the land
was acquired. According to the rules, all social


impact assessment documents and consent
proceedings will be made publicly available. The
Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement
Act, 2013 stipulates mandatory consent of at least
70 per cent for acquiring land for Public Private
Partnership (PPP) projects and 80 per cent for
acquiring land for private companies.
30. Big banks can be dismantled: According to US and
UK regulators, even one of the largest global banks
could be taken apart safely by US government
authorities if it were to fail today. The 2010 Dodd-
Frank Act empowered the FDIC (Federal Deposit
Insurance Corporation) to seize a firm and
dismantle it if regulators think it can't pass through
bankruptcy without posing a significant threat to the
financial system.
31. Despite negative list, service tax coverage yet to
increase: The introduction of a negative list in July
2012 had given the government the power to tax all
services, except the 17 on the list. But it was difficult
for service tax commissioners to map each activity
and determine whether it is a service. The total
number of taxable services has increased from three
in 1994 to 119 in 2012. Service tax collections
accounted for just over 12 per cent of the total tax
collections and over 28 per cent of indirect tax
collections in 2012-13.
32. Centre to raise wheat support price by Rs 50 a
quintal: The Cabinet Committee on Economic
Affairs (CCEA) has approved an increase of Rs 50 a
quintal in the procurement price of wheat. It will be
now Rs 1,400 per quintal for the 2014-15 crop year
(April-March). CCEA also approved an increase of Rs
50 for mustard MSP, to Rs 3,050 a quintal. The
support price for chana (gram) was raised by Rs 100
to Rs 3,100 a quintal. For masur, the MSP was
increased by Rs 50 to Rs 2,950 a quintal and
safflower by Rs 200 to Rs 3,000 a quintal. The
increase in wheat MSP is the same as recommended
by the government advisory body, Commission for
Agricultural Costs and Prices (CACP).
33. HSBC to exit Indian retail broking and
depository biz: Hongkong and Shanghai Banking
Corporation (HSBC) has decided to discontinue its
retail broking and retail depository services
businesses in India. It was operating these under
HSBC InvestDirect Securities (India) Ltd. HSBC
InvestDirect Securities (India) is an arm of HSBC
InvestDirect (India), which also offers investment
advisory services and securities- related financing.
34. Parikh panel says no to export parity for OMCs:
The Kirit Parikh committee has ruled out any change
in the way of calculating under recoveries on the
basis of traded-parity pricing. The export-parity
price is the benchmark free-on-board price of
products, import-parity pricing includes import duty
and various expenses, such as freight and insurance
incurred to import products to India. At present,
subsidy is calculated in terms of import-parity
pricing 80 per cent of the import parity price and
20 per cent of the export-parity price.
35. New RTGS system to improve financial market
efficiency: According to RBI Governor Raghuram
Rajan, the new real time gross settlement (RTGS)
system for fund transfers will improve the efficiency
of the countrys financial markets, with its advanced
liquidity and queue management features. It will
have features such as a facility to accept future value
dated transactions and options to process multi-
currency transactions.
36. RBI sets up advisory panel for national bill
payment system: RBI has constituted an advisory
group to implement a national bill payment system
enabling households to pay utility bills, school fees
and remittances using their bank accounts. The
group is headed by Umesh Bellur of the Indian
Institute of Technology-Bombay. The panel would
suggest the nature of the payment platformeither
an existing one or through a new entityfor Giro
(general inter-bank recurring order)-based bill
payments. A Giro is a payment instruction from one
bank account to another. It facilitates payments
through cash, cheques, credit/debit cards and
prepaid payment instruments, transferring funds to
the bank accounts of beneficiaries.
37. Govt to give Rs 14,000 cr to PSBs: The government
will infuse capital of Rs 14,000 crore in public sector
banks (PSBs) this financial year, including Rs 2,000
crore to the State Bank of India and Rs 1,800 crore
each in IDBI Bank and Central Bank of India. The
banks can raise another Rs 10,000 crore from the
market, depending on their requirements through a
rights issue, follow-on public issue and qualified
institutional placement (QIP).
38. Gujarat govt announces new agriculture power
scheme: The scheme is named 'Immediate Power
Connection Scheme 2013'. Under the new
immediate power connection scheme, applicants
will have to bear 80 per cent of the power
connection cost and will also have to adopt drip
irrigation technique.
39. RBI appoints Technical Committee on Mobile
Banking: The Committee will examine the
options/alternatives including the feasibility of
using encrypted SMS based funds transfer using an
application that can run on any type of handset for
expansion of mobile banking in the country. The
Committee will be headed by Shri B. Sambamurthy,
Director, Institute for Development & Research in
Banking Technology (Chairman).
40. UP promoting guar farming to increase agri
income: To maximise farm income and insulate
farmers from seasonal losses, Uttar Pradesh


government is promoting guar farming, especially in
the arid region of Bundelkhand. Guar provides
better returns to farmers compared to other cash
crops, including paddy and wheat.
41. FM tells PSBs to step up NPA recovery: Finance
Minister P Chidambaram has asked PSBs to monitor
30 big bad debt accounts each.
42. RBI measures got $9.6 bn in forex: India has
received over $9 billion from two foreign schemes
namely RBI's liberalisation of FCNR(B) and tier-I
capital schemes which were announced in Sept to
attract foreign funds and help the country bridge the
widening current account deficit.
43. Arunachal, Meghalaya to be on railways map
soon: Three of the five key railway projects
identified by the Prime Ministers Office (PMO) as
critical for the region are nearing completion.
44. Discoms' dues to PSUs more than double in 3 yrs:
With last years restructuring package for loss-
making power distribution companies yet to bear
fruit, the dues that discoms owe state-owned
generation firms jumped to Rs 15,792 crore last
month, compared with Rs 6,200 crore in June 2010.
Damodar Valley Corporation (DVC), which runs
power plants with a cumulative capacity of over
2,800 Mw in Jharkhand and West Bengal, alone
accounts for Rs 5,900 crore of the dues.
45. WPI inflation edges up to 6.46% in September:
Headline inflation accelerated to a seven-month
high of 6.46 percent in September, mainly driven by
higher food prices. Wholesale prices, India's main
inflation measure, had risen 6.1 percent in August.
46. India becomes leading rice supplier to
Singapore: India has overtaken Thailand as
Singapore's biggest rice supplier for the first time,
exporting 92,865 tonnes or 32.9 per cent of the total
rice supply to the island nation in the first eight
months of 2013.
47. Financial literacy among urban working young
people low: According to a study by IIM
Ahmedabad, despite high education levels, working
young people in urban India don't fare well as far as
financial literacy is concerned. This is likely to be
due to the absence of inputs relevant to financial
literacy in the general education process.
48. Electronic payment can save 1.6% of India's
GDP: According to a World Bank Report, cash can
carry significant handling and transportation costs,
and run the risks of theft, loss, and counterfeiting.
The report stated that individuals and small firms
that make use of this technological medium benefit
from convenient online authorisations, easier record
keeping, and the availability of dispute resolution
mechanisms.
49. Industrial output growth slows to 0.6% in
August: The growth in July was 2.7 per cent and in
August 12, it was two per cent.

50. Health Insurance TPA of India formed, for govt-
owned general insurers: The common in-house
third party administrator (TPA) of public sector
general insurers, named Health Insurance TPA of
India, was incorporated on August 14. The
operationalisation is likely to happen by April 2014.
This common TPA to process health claims has
National Insurance Company, New India Assurance
Company, United Insurance Company, Oriental
Insurance Company and General Insurance
Corporation of India as stakeholders. While the first
four have 23.75 per cent stake each, GIC has five per
cent. The common TPA has been proposed to
prohibit large-scale leakages while settling
insurance claims in the health segment. Further, it is
intended to process claims of public general
insurers in-house, rather than handling by an
external agency.
51. 2014-18 growth at 5.9%: According to the Paris-
based Organisation for Economic Cooperation and
Development (OECD), India is projected to see
moderate average annual growth of 5.9 per cent
during the 2014-18 period. The forecast for India is
much lower than OECD's estimated growth of 6.9
per cent for overall emerging Asia during the same
period. Emerging Asia comprises Southeast Asian
nations, China and India.
52. UIDAI Bill to give Aadhaar statutory status gets
nod: To give a statutory recognition to the Unique
Identification Authority of India (UIDAI), the Cabinet
has approved a National Identification Authority of
India Bill. The proposed legislation seeks to create a
National Identification Authority of India, which will
oversee the implementation of the Aadhaar project
and regulate it. It also seeks to define the penalties
in case of misuse of the data collected under the UID
project. These cover impersonation using Aadhaar
data; unauthorised collection or dissemination of
information, and unauthorized access to the central
database, which will contain all individual details
such as biometrics collected for Aadhaar.
53. IMF pegs FY14 growth at 4.25% on weak
demand: The International Monetary Fund pegged
the country's economic growth at 4.25 per cent. IMF
attributed low growth to poor demand and weak
manufacturing as well as services sector
performance. If India's economy grows by this rate,
it would be the lowest economic expansion in 11
years. Before this, the economy grew by lower rate
of 4 per cent in 2002-03. IMF also predicted that the


retail-price inflation will remain high at 11 per cent
this year owing to food price pressures.
54. Aadhaar-based remittance & query services
launched: The National Payments Corporation of
India has launched two new services, an Aadhaar-
based Remittance Service (ABRS) and a Query
Service on Aadhaar Mapper (QSAM). ABRS will
enable transfer of funds by using an Aadhaar
number. The QSAM service will enable mapping
one's status by using an Aadhaar number. There are
more than three crore (30 million) Aadhaar-linked
bank accounts.
55. Nabard expects to benefit from its new
warehousing scheme: Nabard Warehousing
Scheme 2013 -14 (NWS) which has a corpus of Rs
5,000 crore, envisages disbursing direct loans for
construction of warehouses, silos, cold storage and
cold chain infrastructure. The warehouses and cold
storage created from this scheme will be compliant
to Warehousing Development and Regulatory
Authority ( WDRA) norms, which could facilitate
pledge loan against stored commodities.
56. FinMin asks public sector banks to ramp up
rural ATMs: The PSU banks have put up only 5,726
ATMs by end of August as against the target to
install 34,668 by the end of March 2014. Further,
Direct Benefit Transfer Scheme, which was initially
launched in 25 districts early this year, has been
extended to 78 districts. The government has
identified 191 districts more to introduce the DBT-
LPG scheme, which will be done in a phased manner.
57. RBI allows banks to borrow from international
and multilateral financial institutions: RBI has
granted permission to banks to borrow from
international/ multilateral financial institutions for
a limited period of up to November 30. Such
borrowings should be for the purpose of general
banking business and not for capital augmentation.
Such borrowings shall be eligible for the
concessional swap facility of RBI.
58. Bharti and Walmart call off their retail JV: Bharti
and Walmart, after staying together for six years in
cash-and-carry, have decided to independently
pursue their retail businesses in India. Walmart will
fully own the cash-and-carry business, buying out
Bhartis 50 per cent stake.

59. Aadhaar-linked accounts to be basis for mobile
payments: Government is launching a payment
facility where mobile-to-mobile payments could be
singularly effected through the Unique Identity
(UID) number. Under the Aadhaar-linked payment
bridge, individuals UID numbers would be linked
with their bank accounts at the back-end. A PIN will
be used for authenticating debits, putting a layer of
security on transactions. The Aadhaar-based
remittance system on mobile will make transferring
money easy by removing the need to remember
bank account details, such as IFSC code, etc, as users
will only need their Aadhaar numbers.
60. Bihar registers highest industrial growth among
BIMARU states: As per a study by ASSOCHAM,
Bihar has registered highest growth rate of 14
percent in the industrial sector during nine years
period of 2004-2012 among BIMARU category
states -Bihar, Madhya Pradesh, Rajasthan and Uttar
Pradesh. However, lack of land, power and health
services and poverty may hamper Bihar's prospects
in future.
61. Mandatory training for agents puts pressure on
insurers: Licensing rules by Irda stipulate that
agents have to undergo 50 hours training for basic
licence and 75 hours training for composite licence.
Insurance agents also have to undergo a 25-hour
practical training to renew their licence, which is
valid for three years. Composite agents will have to
undergo a practical training of 50 hours if they want


to renew their licence. According to earlier rules
formulated in July 2000, mandatory training was
100 hours for insurance agents and 150 hours for
composite agents who were entering the industry
for the first time. This was reduced to 50 hours and
75 hours, respectively, in October 2007. The
insurers want reduction in training hours. Various
estimates suggest approximately Rs 600-650 crore
is spent annually by insurance companies on
training their agents.
62. RBI may make bank licensing process more
frequent: To expand the reach of banking, RBI is
considering making the licensing process more
frequent and allow free entry of banks as and when
necessary.
63. All national, state highways in Punjab to be
four/six-laned by January 2016: The Punjab
government is working to realise its target of 4/6
laning of all national and state highways by January
2016 and has set aside Rs 3,080 crore for the
purpose. This distinction of world-class connectivity
would help Punjab to attract more investment and
ease traffic on the roads thereby in the coming
years.
64. April-Aug fiscal deficit swells alarmingly: Rise in
Plan expenditure has pushed the central
governments fiscal deficit to 74.6 per cent of the
entire years Budget estimate (BE) at the end of only
the first five months of the current financial year.
The fiscal deficit in the first five months of a
financial year was higher than 75 per cent of BE only
in 2008-09, when the global financial crisis began.
But that year, BE was just 2.5 per cent of GDP and it
turned out to be more than eight per cent when the
year ended.
65. FM heat on unregulated financial sector:
According to Finance Minister, Chidambaram, a
financial consumer is comfortable to participate in a
regulated market and there should be an assurance
that she will be protected. However, exploiting the
limitations of the regulatory architecture, ingenious
financial engineers come up with innovative
products outside the regulatory jurisdiction and
deprive the consumers with such products from
regulatory protection. There have been five
institutional milestones in Indian corporate financial
institutions in the last six months FSLRC report,
new Companies Act, the passage of Pension Fund
Regulatory and Development Authority (PFRDA)
Bill, placing commodity futures market regulation
under the finance ministry and the re-promulgation
of the Security Laws Amendment Ordinance.
66. SC upholds HC order on CNG to Gujarat under
APM: The Supreme Court has directed the Union
government to provide compressed natural gas
(CNG) to Gujarat on the same rate as it is given to
Delhi and Mumbai. But at the same time, the state
government will have to pass necessary laws to
make it compulsory for all four wheelers registered
in Gujarat to covert to natural gas.
67. India shoring forex reserves to deal with
tapering: According to Mr P Chidambaram, Union
Finance Minister, India is shoring up its forex kitty
to deal with the impact of US tapering. Tapering
refers to gradual withdrawal of monetary stimulus
by the US Federal Reserve. The reversal of the easy
money policy by the US is expected to impact the
global markets as well as the economy.
68. NABARD takes to pvt sector financing: National
Bank for Agriculture and Rural Development
(NABARD) has opened a lending window to the
private sector for creation of warehouse space, cold
storages and cold chains. This is besides financing to
state governments, state government undertakings,
(special purpose vehicles) SPVs set up under PPP
mode, cooperatives, federations, cooperative
federations, (Agricultural Produce Market
Committees) APMCs, state-level boards, apex
marketing boards' bodies and panchayats for
creation of scientific storage space for food grains
and other agricultural commodities and perishables.
69. Life insurers get 3 months to phase out old
products: The Insurance Regulatory and
Development Authority (Irda) has extended the
deadline for phasing out old products in the
traditional segment to December 31. The earlier
deadline was October 1. However, the sale of highest
net asset value (NAV) products and index-linked
products in the life insurance segment has been
banned from October 1.

70. Punjab University steals a march over IITs in
global rankings: According to the Times Higher
Education World University Rankings, while Panjab
University, is placed at 226 among 400 institutions
worldwide, IIT Kharagpur has slipped from 226 to
250 and IIT Roorkee is placed in the 351-400 band.
The two other new entrants are IIT Delhi and
Kanpur, both in the 351-400 group. India has
increased its representation in the world rankings
with five world top 400 universities. Overall,
California Institute of Technology holds on to the
world number one spot for the third consecutive
year, while Harvard University tied with Oxford
regains second place, pushing Stanford University to
fourth. The US remains dominant with seven
institutions in the world top 10 and 77 in the top
200 (one more than last year).


71. 5-kg gas cylinders from Oct 5: As part of a series of
customer empowering initiatives, the Ministry of
Petroleum and Natural Gas is set to commence the
sale of five-kg gas cylinders at market-linked prices
through selected petrol pumps in major cities. The
ministry is also launching portability of LPG
connection across oil marketing companies (OMCs)
on the same day. The first initiative allows the sale
of these LPG cylinders at the market price with
minimal paperwork through company- owned retail
outlets (petrol stations). Under this portability
scheme, a consumer can now opt for the distributor
of his choice within a cluster of LPG distributors in
the vicinity and across the oil companies.
72. ADB cuts FY14 GDP growth forecast to 4.7%: The
multi-lateral agency said the Indian economy has
been under pressure with the recent depreciation of
the rupee and capital outflows, adding to structural
constraints, which is making it difficult for the
economy to return to a high growth path.
73. Poor are more trustworthy and bankable:
Seeking to promote financial inclusion, Finance
Minister P Chidambaram has called upon banks to
focus on poor customers who were more
trustworthy and "bankable" as compared to large
borrowers.
74. RBI forms crack team to help Jalan vet bank
licence bids: RBI has nominated three members to
the advisory committee formed to scrutinise bank
licence applications. Former Securities and
Exchange Board chairman C B Bhave, former RBI
deputy governor Usha Thorat and central bank
board member Nachiket Mor would assist Bimal
Jalan, former RBI governor, to vet the applications.
The central bank is conducting the initial screening
of the 26 applications.
75. India to start power supply to Bangladesh: India
will start supplying electricity to Bangladesh
through the new transmission line between the two
nations. Transmission line will link India's eastern
power grid with the western electricity grid of
Bangladesh.
76. India's share in M&As of emerging nations is a
mere 5.1%: This is lowest in the BRIC (Brazil,
Russia, India and China) nations. China led the
emerging market activity with $107.1 billion (32 per
cent market share), followed by Russia ($52.1 billion
or 15.7 per cent), Brazil ($35.3 billion or 10.7 per
cent) and India ($17 billion or 5.1 per cent).
77. Regulators' pay raised by Rs 75,000 a month
from July: Chairpersons and full-time members of
regulatory bodies would now draw higher salaries,
with the Cabinet approving raises of Rs 75,000 a
month, with retrospective effect from July. Now, a
chairperson would get Rs 4.5 lakh a month (without
house and car), against Rs 3.75 lakh earlier. A full-
time member would draw Rs 3.75 lakh (without
house and car) a month, against Rs 3 lakh earlier.
The raises would benefit chairpersons and members
of the Securities and Exchange Board of India, the
Insurance Regulatory Development Authority, the
Telecom Regulatory Authority of India, the Central
Electricity Regulatory Commission, the Competition
Commission of India, the Pension Fund Regulatory
and Development Authority, the Petroleum and
Natural Gas Regulatory Board, the Warehousing
Development and Regulatory Authority and the
Airports Economic Regulatory Authority of India.
78. Clones of existing banks: Finance Minister P
Chidambaram has said several new banks, licences
for which would be issued by the Reserve Bank of
India shortly, should have a differentiated approach
rather than becoming clones of existing banks. Each
one of them should cater to the needs of a special
group of customers who do not have banking today.
Each one must pursue a different path. While
Singapore has five different kinds of licences, Hong
Kong has a three-tier structure.

DEC 2013

1. Rich get poorer in India, other emerging
nations: According to World Ultra Wealth Report
2013 from UBS AG and Wealth-X, Indias
billionaire club shrinks by 5% losing six members
to become 103 last year; their combined wealth
also declined by the same percentage. Mumbai is
home to 30 billionaires, of which, one in three is
associated with industrial conglomerates or the
pharmaceuticals industry.
2. WTO Bali meet: The Right to Food Campaign, an
umbrella of about a 100 non-profit organizations
have appealed to the Government to reject the
peace clause proposed by developed countries
and safeguard Indias food sovereignty while
negotiating at the World Trade Organisations
(WTO) Bali Ministerial meet to be held from
December 3 to 6. The four-year Peace Clause has
been proposed by the developed countries as a
compromise formula to provide protection to
developing countries against penalties for
breaching the farm subsidy limit.
3. Bank unions demand 5-day week: Trade
unions in the banking sector have demanded 5
days week as part of their bipartite wage


negotiations as there are alternative channels
such as ATMs, Internet and mobile banking for
banking operations.
4. Reliance Life ties up with five insurance
repositories: Reliance Life Insurance Company
(RLIC) has tied with all five insurance
repositories to provide life insurance policies in
electronic form across all its products. The
Insurance Regulatory and Development
Authority (IRDA) has approved five companies
Database Management Ltd, Central Insurance
Repository Ltd, SHCIL Projects Ltd, CAMS
Repository Services Ltd and Karvy Insurance Ltd
as insurance repositories (IRs).

5. M. V. Tanksale is IBAs new chief executive:
M.V. Tanksale, former Chairman and Managing
Director of Central Bank of India, has taken over
as Chief Executive of the Indian Banks
Association. Tanksale succeeds K. Ramakrishnan,
who was at the helm of the Association for five
years up to November 30, 2013.
6. SEBI extends ESOP deadline: SEBI has extended
the timeline for employee welfare trusts for
aligning their schemes with the SEBI ESOP/ESPS
guidelines to June 30 next year. In January 2013,
SEBI had prohibited employee welfare trusts
from purchasing shares of the company from the
secondary market.
7. FMC nod for S. Mishra as MCX Chairman: The
commodity market regulator Forward Markets
Commission has approved the appointment of
Satyananda Mishra (IAS Retd) as the Chairman of
Multi Commodity Exchange.
8. India seeks Australias help in skills training:
As per HRD Minister M. M. Pallam Raju, the
availability of good quality trainers is a
significant challenge as India raises its efforts to
meet the national goal of skilling 500 million
people by 2022. The Ministry of HRD has
launched an ambitious programme under the
national vocation education qualification
framework of the AICTE to provide for skill
development in schools in classes 9 to 12.

9. Fiscal deficit touches 84% of Budget target:
According to data released by the Controller
General of Account (CGA), the deficit in the first
seven months of the current fiscal touched Rs
4.58 lakh crore against the target of Rs 5.42 lakh
crore for full year. This is 84.4 per cent of the
target. This increase is due to low tax collections,
while both Plan and non-Plan expenditure has
gone up. Fiscal deficit is mainly the difference
between income and expenditure of the
Government. Higher deficit means, Government
will borrow more from the market. This can
drain the liquidity from the market leading to
increase in interest rates.
10. Sahoo panel submits review report on GDRs,
FCCBs: The M.S. Sahoo Panel that was set up to
undertake a comprehensive review of the global
depository receipts (GDR) scheme has submitted
its report. The committee is understood to have
reviewed the GDR scheme of 1993 in the light of
legislative changes in the financial sector and
macroeconomic developments besides the
enactment of a new company law.
11. Threshold limit for e-payment of excise,
service tax lowered: The Centre has lowered
the threshold limit for mandatory e-payment of
excise duty and service tax to Rs 1 lakh from Rs
10 lakhs earlier. With effect from January 1, a
manufacturer or a service taxpayer who has paid
duty or tax of more than Rs 1 lakh in the previous
financial year will be required pay duty or tax
through internet banking.
12. Dont bank on incentives, tax sops: According
to Financial Services Secretary Rajiv Takru,
Pension funds should look to maximise returns
and improve their reach rather than seek
incentives and tax breaks.
13. Monitoring MFIs - Self-regulatory
organisations get RBI recognition: To ensure
effective functioning of Non-Bank Finance
Company-Microfinance Institutions (NBFC-MFIs),
the RBI has decided to recognise self-regulatory
organisations for monitoring such institutions. At
present, there are two SROs Micro Finance
Institutions Network (MFIN) and Sa-dhan
monitoring the functioning of NBFC-MFIs in the
country. However, SRO as a body was not
recognised by the RBI.
14. Foreign banks taking subsidiary route to get
capital gains tax exemption: As per RBI, foreign
banks that wish to convert their branch holding
operations in India into wholly-owned
subsidiaries will be exempt from capital gains tax
and stamp duty.
15. RBI nod for NHBs $200-million overseas
loan: National Housing Bank has received RBI
approval for raising $ 200 million external
commercial borrowing under the affordable
housing window.
16. Police orders closure of over 1,000 ATMs in
Bangalore: Bangalore Police has ordered the
shutdown of 1,037 ATM centres in Bangalore.
The State Government had ordered banks to post
security personnel and install CCTV cameras
(both inside and outside) all ATM sites.


17. IRDA plans unique identity code for hospitals:
In a major step to bring down frauds in health
insurance, the Insurance Regulatory and
Development Authority and the Insurance
Information Bureau (IIB) have started an
initiative to provide a unique identity code for
hospitals. The step will help the health insurance
industry streamline and identify the charges for
different treatments by different hospitals.
18. Bank frauds rising: Double to Rs 6,212 cr in
2012-13: Bank loan frauds almost doubled in
2012-13 adding up to Rs 6,212 crore against Rs
3,183 crore in the previous year. In terms of
numbers, 349 cases of fraud of over Rs 1 crore
were reported in 2012-13 up 28 per cent over
the previous years 273 cases.
19. Sarfaesi Act most effective tool to recover bad
loans: According to the RBIs Report on Trend
and Progress of Banking in India, 2012-13, banks
have recovered Rs 18,500 crore through the
Sarfaesi route. Also, in terms of efficiency, the Act
has proved to be more effective than the debt
recovery tribunals (DRTs) or mediation by Lok
Adalats.
20. RBI troubled by loan quality of banks: In its
report, Trend and Progress of Banking in India,
2012-13, the RBI observed that the banking
systems loan quality, primarily in the industrial
and infrastructure sectors, has deteriorated
significantly during the year and there was an
increase in total stressed assets. The banking
systems total stressed assets (bad loans plus
restructured standard loans) rose to 9.2 per cent
of total advances as on March-end 2013 against
7.6 per cent as on March-end 2012. While the
primary driver of the deteriorating loan quality
was the domestic economic slowdown, other
factors such as delays in obtaining statutory and
other approvals as well as lax credit
appraisal/monitoring by banks were also
significant. Further, higher credit concentration
in certain sectors and higher leverage among
corporates also increased the stress on loan
quality.
21. RBI for diluting Govt stake in public sector
banks: As per RBI, the current level of
Government shareholding in public sector banks
gives it sufficient headroom for diluting its stake
in many of these banks. The Governments
shareholding in the 21 public sector banks
ranges from 55 per cent to 82 per cent.
22. Private banks racing ahead of public sector
ones in setting up ATMs: The total number of
ATMs in the country rose to 1.14 lakh in 2012-13,
with the growth primarily driven by private
sector banks. Their share in the total increased
38 per cent as of March 2013. Although urban
and metropolitan centres accounted for over 65
per cent of the total ATMs, there has been a rising
trend in those located in the rural and semi-
urban centres in the recent years. Indias largest
lender State Bank of India topped in the number
of ATMs at 32,777 as on September 30. Among
the private sector banks, Axis Bank had the
highest number at 11,796.
23. Weak rupee has no significant impact on
creditworthiness: According to Fitch Ratings,
the spillover effects of a weaker rupee have not
significantly hurt Indias creditworthiness, and
hence would not trigger any rating action at this
point.
24. Complaints against foreign, private banks on
the rise: A per RBI Report on Trend & Progress
of Banking 2012-13, despite the common
perception of dissatisfaction from services of
public sector banks, the per bank
branch/account number of complaints in the last
fiscal was higher for foreign and private sector
banks. In 2012-13, there were 1,543 complaints
per 100 bank branches of foreign banks, highest
among all bank groups. Complaints in Tier-I cities
New Delhi, Mumbai, Chennai, Kolkata,
Bangalore and Hyderabad account for more
than half the total complaints received by 15
Banking Ombudsman offices.
25. Banks investment in G-Secs must come down
gradually: As per RBI, it is necessary to reduce
banks requirements of investing in government
securities in a calibrated way, to what is strictly
needed from a prudential perspective. The scope
for such reduction will increase as government
finances improve.
26. First bank for women: Bhartiya Mahila Bank
has started operations. Usha
Ananthasubramanian, is the banks first
Chairperson and Managing Director. BMB, has
been set up with a capital base of Rs 1,000 crore.
27. 29 developers get more time to complete SEZ
projects: Twenty-nine developers of Special
Economic Zones (SEZ), including Tata
Consultancy Services, Navi Mumbai SEZ and
Parsvnath have been given more time by the
Government to execute their projects. Global
slowdown and fluctuating market conditions
were among the top factors cited by the
developers for the delay in their projects.
28. Banking on low-cost outsourcing model:
Bharatiya Mahila Bank (BMB) is the only bank to
be built completely on a low-cost outsourcing
model. While the bank will focus on acquiring
and servicing customers and speeding up the


process of financial inclusion through the low-
cost outsourcing model, back-end services such
as debit and credit card management, digital and
mobile banking, asset-liability management and
ATM management will be taken care of by US-
based banking technology company FIS.
29. Moodys maintains negative outlook on
banking sector: UBS downgraded India to
neutral from overweight even as it upgraded
China to overweight. Global ratings agency
Moodys Investors Service maintained its
negative outlook on Indias banking system,
reflecting the negative effects of currency
volatility, persistent inflation and slowing
economic growth.
30. Process of deregulating diesel prices will
continue: As per Veerappa Moily, Minister of
Petroleum & Natural Gas, had it not been for the
steep fall in the rupee recently, he would have
completed the process of diesel deregulation.
31. Bharat Ratna for Sachin, C.N.R. Rao: The Union
Govt has announced conferring the Bharat Ratna
on Sachin Tendulkar who becomes the first
sportsperson to receive the nations highest
civilian honour. Eminent scientist C. N. R. Rao has
also been conferred the award.
32. Bancon 2013: Bankcon held in Mumbai was
hosted by Bank of India. The theme of the
conference was Banks of the future: Gearing up
to meet the emerging environment.
33. Withdrawal of application for New Bank: RBI
had, on July 1, 2013 placed on its website a list of
26 applicants for new bank licences in the private
sector. The following applicants have withdrawn
their applications for establishment of New
Banks as per RBI policy (a) Tata Sons Limited;
(b) Value Industries Limited, Aurangabad.
Application of K. C. Land & Finance Ltd.,
Chandigarh has been included in the list.
34. RBI extends Liquidity Support to Micro, Small
and Medium Enterprises: RBI has decided to
provide refinance of an amount of Rs 5,000 crore
to the Small Industries Development Bank of
India (SIDBI). The refinance will be available for
direct liquidity support to finance receivables,
including export receivable, to MSEs by SIDBI or
for liquidity support to MSEs through selected
intermediaries, that is, banks, Non-Banking
Financial Companies (NBFCs) and State Finance
Corporations (SFCs). The refinance will be
available against receivables, including export
receivables, outstanding as on November 14,
2013 onwards. The facility will be available at the
prevailing 14-day term repo rate for a period of
90 days. During this 90-day period, the amount
can be flexibly drawn and repaid. At the end of
the 90-day period, the drawal can also be rolled
over. The refinance facility will be available for a
period of one year up to November 13, 2014.
35. Chakrabarty blames public sector banks for
sitting on bad loans: As per RBI Deputy
Governor K.C. Chakrabarty, public sector banks
sat on NPAs far longer than their private sector
counterparts. According to him, (a) NPAs had
started rising from 2007, before the financial
crisis; (b) Private sector banks and even foreign
banks have been able to deal with the NPA
menace better and these banks identified the
problem earlier; (c) when regulations are
tightened, asset quality improves; (d) Prudential
norms (like higher provisioning) are in the
interest of the banks; (e) for government
companies, the project appraisal has to be more
stringent. The more powerful the borrower, the
appraisal has to be more stringent.

36. Onion, food items push wholesale inflation to
8-month high of 7%: The Wholesale Price Index
(WPI) for October rose to 7 per cent from 6.46
per cent in September. The retail inflation,
represented by the Consumer Price Index (CPI),
rose 10.09 per cent in October from 9.84 per cent
in September.The core inflation (reflecting
mainly prices of manufacturing goods) also rose
to 2.6 per cent in October from 2.1 per cent in
September. Costlier vegetables, especially onion,
and food articles are to blame for the wholesale
price and retail inflation.
37. Bad loans of 40 listed banks rise 38% in H1:
The net NPAs of 40 listed banks as on March 31,
2013, were Rs 93,109 crore, which rose to Rs
1,28,533 crore as on September 30, 2013. Of the
40 listed banks, 14 have reported more than 50
per cent jump in net NPAs. period.
38. Power sector fuels modest recovery in factory
output: Industrial production recorded a growth
of 2 per cent in September against a contraction
of 0.7 per cent in the same month last year.
Industrial production in August was up 0.4 per
cent. The IIP growth came mainly from the power
and mining sectors, while manufacturing was
only marginally better. The consumer durables
segment contracted 10.8 per cent in September.
39. Exports surge in Oct: Rising demand from the
US and the EU helped Indias merchandise
exports grow for the fourth month. Exports
posted a robust 13.47 per cent growth to $27.27
billion in October 2013. Imports continued to
decline bringing down the trade deficit to $10.5
billion during the month. This is almost half the
$20.21 billion registered in October 2012.


Exports during the April-October period grew
6.32 per cent to $179.37 billion. Imports at $270
billion were lower by 3.8 per cent.
40. IRDA to set up insurance clearing house: IRDA
will set up an Insurance Clearing House to ensure
timely and effective reconciliation of inter-
company reinsurance and coinsurance balances
and efficient settlement of these balances. The
clearing house will be registered as a public
limited company under the Companies Act, 1956.
It will have a minimum paid-up share capital of
Rs 100 crore.
41. Posco gets more time to complete Odisha SEZ:
South Korean steel major Posco has got time till
next year to acquire land and disburse
compensation for its proposed multi-product
Special Economic Zone in Odisha. Posco proposes
to invest $12 billion in the SEZ, one of the largest
foreign direct investments to be brought into the
country.
42. The SEZ project proposes to produce 63,48,000
tonnes of finished steel products per year and
provide direct employment to about 18,000
people and indirect employment to 30,000 more.
43. Oxford arm to set up university in Sanand
with Whistling Group: The university, which
opened its portals in 1096, is planning a higher-
education campus through its wholly-owned
subsidiary, Isis Innovation Ltd. Isis will be
partnered by the Whistling Group. This
independent, industry-focused university will
offer courses in alternative energy and
environmental studies.
44. CSIR set to open TechVills in rural areas: The
Council for Scientific Industrial & Research
(CSIR) is gearing up to establish a chain of 28
TechVills in rural areas. These TechVills, to be
spread across the country, will showcase
technologies suitable for application in specific
areas.
45. Govt plans survey-based data collection for
services sector: The Central Statistics Office
(CSO) and the Directorate General of Commercial
Intelligence & Statistics (DGCIS) are conducting
domestic pilot surveys on services data collection
in areas such as tourism and health. India, like
many other developing countries, has inadequate
data on services. It is a big handicap while
negotiating Free Trade Agreements with other
countries and also framing domestic policies for
the sector.
46. Competition panel okays Jet-Etihad deal: The
Competition Commission of India has given
clearance to sale of stake by Jet Airways to Etihad
Airways. The Commission is of the opinion that
the proposed combination is not likely to have
appreciable adverse effect on competition in
India.

47. Vegetables push retail inflation over 10%:
The Consumer Price Index (CPI) touched 10.09
per cent in October, up from 9.84 per cent in
September. Prices of vegetables shot up a 45.67
per cent against 10.74 per cent in October 2012.
48. Retailers seek fixed 20% margin on drugs:
According to retailers, due to drastic cut in
prices of about 350 drugs following the Drug
Price Control Order, their gross average margins
fell to 14-16 per cent and that of stockists to 8.5
per cent.
49. Capital infusion by Govt is key to PSU banks
ratings: As per India Ratings & Research, public
sector banks would depend more on capital
infusion from the Government, as their capital
ratios could be impacted by falling internal
accruals along with pressure on loan portfolio.
The Government and Life Insurance Corporation
of India (LIC) injected about 95 per cent of equity
into banks between FY10 and FY13. Any dilution
in the Governments stance due to fiscal
pressures could have an immediate impact on the
ratings of weak banks. The Prime Ministers
Economic Advisory Council, has suggested that
the Government to dilute its stake in its banks to
raise Rs 55,000 crore for equity injections.
50. SEBI panel for hiking mutual funds net worth
to Rs 25 cr: Market regulator SEBIs mutual fund
advisory committee has recommended that fund
houses with assets under management (AUM) of
over Rs 1,000 crore should have a net worth of
Rs 25 crore. The current net worth requirement
for an asset management company (AMC) is Rs
10 crore. The committee has also suggested Rs
25 crore as the minimum net worth for new
applicants.

51. Inclusion of labour norms in free trade pacts
on the rise: According to a report by ILO, more
countries are now ensuring that Free Trade
Agreements lead to better working conditions. It
found that 58 trade agreements included labour
provisions in June 2013, up from 21 in 2005 and
four in 1995.
52. Company Secretaries may soon be called
governance professionals: As per Corporate
Affairs Minister Sachin Pilot, the Government
would move amendments in Parliament for a


new nomenclature for company secretaries
governance professionals. The Govt is sharpening
supervision of compliance procedures by
corporates through the proposed National
Financial Regulatory Authority.
53. Indian billionaires only half as wealthy as
Chinese counterparts: According to the report
on ultra high net worth individuals published by
Wealth-X and UBS, India is home to 103
billionaires with a combined wealth of $180
billion, six fewer individuals than the year before.
By contrast, Chinas billionaire population grew
by 10 to 157, with a total wealth of $384 billion.
The US has the largest number of billionaires,
515, representing nearly a quarter of the total
global billionaire population, with a combined
wealth of $2,064 billion. Mumbai is home to
2,135 of Indias richest individuals, followed by
New Delhi (1,980), Bangalore (1,980), Kolkata
(635), Hyderabad (540) and Chennai (385).
54. Life insurers back on growth path after 3
years: According to IRDA, after three years of
decline, life insurance business is back on the
growth path. The industry witnessed a steep fall
in business after the introduction of new
guidelines in September 2010 for unit-linked
insurance plans, stipulating, among others, lower
commission for agents and higher lock-in periods
. Unit-linked plans, at that time, accounted for
over 80 per cent of business of private life
insurers.
55. Commerce Ministry allays fears on free trade
pacts: The Commerce & Industry Ministry has
clarified that Indias Free Trade Agreements
(FTAs) with most trading partners have resulted
in an increase in exports and not caused any
adverse impact on the manufacturing sector.
Most regional and bilateral FTAs signed by India
either related to SAARC countries or to South
East Asia and North East Asia. In case of SAFTA,
India has a trade surplus of about $12 billion.
With Asean, exports have more than doubled
after signing of the Indo-Asean Trade in Goods
Agreement in 2009, though imports have also
grown. A significant part of Indias imports from
this region were in essential items such as edible
oils from Malaysia and Indonesia and petroleum
products and coke from Indonesia.
56. India, US launch agri training programme
with Africa: The US and India have launched the
third India-US-Africa triangular agricultural
training programme at the National Institute of
Agricultural Extension Management (MANAGE)
Hyderabad. This partnership, supported by the
US Governments global hunger and food security
initiative Feed the Future, aims to improve
agricultural productivity and support market
institutions in Kenya, Liberia, and Malawi.
57. S&P affirms BBB-minus rating and negative
outlook: Global rating agency Standard & Poors
has affirmed its BBB minus sovereign rating for
India, but the outlook remained negative. BBB
minus is the last investment grade. A notch
lower will not only hurt foreign investment flows,
but Indian companies will also have to pay more
to borrow abroad. Giving reasons for affirming
the rating, the agency listed strengths such as low
external debt, ample foreign exchange reserves
and an increasingly credible monetary policy. But
these strengths, were counter-balanced by the
onerous burden of its public finance, lack of
progress on structural reforms and shortfalls in
basic services.
58. Service tax noose to tighten on specific
sectors: The Finance Department will closely
monitor service tax compliance in sectors
identified as chronic tax evasion. These sectors
include renting of immovable property,
construction and real estate, information
technology, mining, advertisement and storage
and warehousing.
59. Direct plans of mutual funds not a hit with
retail investors: From January 1, 2013, all
mutual funds were asked to offer a new Direct
Plan with their schemes so that investors could
bypass the services of a distributor, save on costs
and thus earn higher returns from their funds.
But 10 months on, while a good number of
institutions and affluent investors have moved
their money into direct plans, very few retail
investors have made the shift.
60. CAG becomes member of UN audit panel: The
Comptroller and Auditor General of India Shashi
Kant Sharma has been elected to the coveted
United Nations Board of Auditors for a six-year
term. India will replace China beginning July 1,
2014. The CAG of India will now get access for
audit of the UN organisations, including the UN
Headquarters. India was earlier in the Board for
six years from 1993.
61. US pushes India again for early phase-out of
textile sops: India will have to start phasing out
its textile subsidies soon to conform with the
Subsidies Agreement of the World Trade
Organisation. While export subsidies are
prohibited under WTO rules, the multilateral
trade body allows countries with per capita
income below $1,000 to give such incentives till
exports are lower than 3.25 per cent of world
trade in that particular commodity. Indias share
in the global market for textiles crossed the limit
in 2007, according to WTO records, and is almost
four per cent at the moment. However, since
countries are given eight years to remove the
subsidies, India has time till 2015 to do so.


62. Oil Ministry wants FinMin to cut taxes on
branded petrol, diesel: The Ministry of
Petroleum & Natural Gas has requested the
Finance Ministry to review the duties levied on
branded auto fuels (petrol/diesel) to bring down
the price differential with non-branded or
regular fuels. This, will attract consumers to
branded fuels, which will help improve fuel
efficiency by about two per cent, resulting in
reduction in overall demand.
63. PMs panel will drive execution of infra
projects: The Prime Ministers Project
Monitoring Group will start supervising the
implementation of 99 infrastructure projects,
with investments worth Rs 3.6-lakh crore,
already cleared by it. The projects, cleared by the
PMG and the Cabinet Committee on Investments,
include Sterlite Energy Ltds project worth Rs
12,000 crore, Adani Mundras thermal power
plant worth Rs 9,900 crore, Lancos Rs 6,000-
crore facility, Mumbai Airports new terminal
worth Rs 12,000 crore and Jhajjar Power Ltds
project worth Rs 6,600 crore. Bank funds worth
about Rs 7-lakh crore are locked in these projects
that were stuck due to various reasons, including
environment clearance.
64. UKs decision to scrap visa bond: The British
government has decided to scrap a controversial
3,000 visa bond scheme for six Commonwealth
nations, including India.
65. Top 200 firms have fewer than 10% woman
staff: According to a survey by CII, women
employees account for less than a tenth of the
workforce in more than half of the top 200
companies by market capitalization. Such
companies mainly operated in sectors such as
mining, manufacturing, oil exploration,
construction and engineering. About 20 per cent
of the companies had women employees
accounting for 10-20 per cent of their staff
strength. Another 12 per cent of the companies
mainly in the service sector had female staff
ranging between 20 and 40 per cent of their
workforce. Also, half of the companies surveyed
had at least one woman on their board of
directors. The Companies Act stipulates
appointment of at least one woman on the board
of a company.

66. Mars Orbiter lifts off successfully, begins 400-
million-km journey: Indias maiden mission to
Mars blasted off on 5
th
Nov from launch pad at
the Satish Dhawan Space Centre at Sriharikota in
Andhra Pradesh.
67. Jignesh Shah quits MCX: Jignesh Shah, promoter
of troubled National Spot Exchange Ltd (NSEL),
has stepped down as Non-Executive Vice-
Chairman of MCX. Shah, who recently quit from
the board of MCX Stock Exchange, also heads
Financial Technologies as Chairman and Group
CEO.
68. New Chairman for National Payments Corp: M.
Balachandran has been appointed chairman of
National Payments Corporation of India (NPCI),
taking over the reins from Infosys N. R. Narayana
Murthy.
69. CAD will be below $70 b this fiscal: According
to C Rangarajan, Chairman of the Prime
Ministers Economic Advisory Council, India may
contain the current account deficit for 2013-14
below $70 billion, lower than 2011-12 level.
70. Manufacturing shrinks for third straight
month: HSBCs manufacturing purchasing
managers index for India remained unchanged
in October, staying below 50 for the third
consecutive month. The index in October was at
Septembers level of 49.6.
71. G.K. Pillai appointed Chairman of MCX-SX:
MCX Stock Exchange (MCX-SX) has appointed
Gopal Krishna Pillai, IAS (Retd), as the Chairman
and Thomas Mathew T, as Vice-Chairman of its
board of directors.
72. FDI may soon be allowed in e-retail services:
The Government may widen the scope of foreign
investment in e-retailing by allowing FDI in
services such as selling of financial products and
rail-ticket booking, in addition to transacting in
goods.
73. FIPB eases defence FDI norm: The Foreign
Investment Promotion Board (FIPB) has decided
not to reject proposals from a foreign company
only because it or any of its group companies or
their parent is under investigation in the country
or abroad. Clearance will be given without
prejudice to any existing or future civil or
criminal proceedings against the foreign investor
or its parent.

74. Decoding the numbers that drive food
inflation: Food inflation has increased since the
beginning of 2012. The rate of retail food
inflation for urban households has been higher
than the wholesale food inflation rate in recent
months. The general increase in food inflation is
being driven by protein-rich eggs, fish and meat,
which have experienced volatile but high
inflation; and, above all, vegetables. Other major
components of spending, like fuel and light, have


seen a reduction in the overall inflation in the
past two years but, sufficiently high to keep the
retail inflation rate close to double digits. Retail
inflation remains significantly higher than
wholesale inflation and is much higher than core
inflation in particular, which has been sharply
reduced by policy and the slowdown.
75. Banks send notice to Delhi Airport Metro for
payment of dues: A consortium of lenders led by
Axis Bank which have a total exposure of Rs
1,800 crore has sent a notice to Delhi Airport
Metro Express Pvt Ltd (DAMEPL) for payment of
loans which have turned into non-performing
assets. The notices have been served on Reliance
Infrastructure Ltd and Delhi Metro Rail
Corporation (DMRC).
76. RBI asks banks to increase bad loan
provisions: The banking systems provision
coverage ratio (PCR) has dropped below 50 per
cent, compared with 70 per cent two years ago.
RBI expects banks to maintain a high level of
overall provision, over and above the regulatory
requirement for individual loan losses.
Internationally, provisioning is 70-80 per cent.
77. NCAER report pegs fiscal deficit at 5.1%: The
National Council of Applied Economic Research
(NCAER) has pegged the governments fiscal
deficit for this financial year at 5.1 per cent of
gross domestic product (GDP), against the
finance ministrys estimate of 4.8 per cent. The
GDP growth is estimated at 4.8-5.3 per cent in
2013-14.
78. RBI to overhaul debt recovery process:
Speaking at Bancon 2013, RBI Governor Raghu
Ram Rajan said that RBI will announce measures
to ensure fair recovery for bankers and investors,
and to punish those trying to milk the system.
Other observations by him included (i)
Promoters were taking undue advantage of the
debt restructuring process; (ii) Bank
management with limited tenure keeps on
extending and evergreening a loan so that ones
successor has to deal with it; (iii) the practice of
transfer of top management among public sector
banks (PSBs) could be reviewed; (iv) Countrys
industrial sector had come a long way and there
was no need to enter free-trade agreements that
give foreign manufacturers an undue advantage,
but there is no reason to give domestic
manufacturers protection.
79. Pakistan hints at MFN status, allowing more
products from India: The negative list which
became operational from March 21 last year
contains 1,209 items that India cannot export to
Pakistan, including pharmaceutical and
agricultural products. India can export around
7,500 items there. Pharmaceutical and
agricultural items are likely to be allowed to be
imported.
80. Inflation control still RBI's main agenda: As
per deputy governor of RBI, K C Chakrabarty,
cost of money is high whenever inflation is high
and growth is not sacrificed because of high
interest rates. Growth is sacrificed because of
high inflation. People will not save if the rate of
return is lower than inflation. If banks have to
give higher rates for mobilising deposits, then
they cannot lend money at lower rates.

81. FM wants bank licences to go to those with
innovative models: According to Finance
Minister P Chidambaram, the new banking
licences, expected to be given in January, would
be issued to applicants with innovative and
different banking models. According to FM, banks
are required to cater to different sections like
communities, tribal populations, Northeast,
urban poor, rural poor, farmer families, women.
It is, therefore, necessary to promote banks that
cater to these individual segments of people.
82. Banks' exposure to shadow banking entities
up in India: According to an international body
of financial regulators, India is among the
nations which have witnessed a marked increase
in the exposure of its banks to 'shadow banking'
entities, whose asset base globally grew to $71
trillion in 2012-end. Shadow banking system
refers to credit intermediation involving entities
and activities outside the purview of the regular
banking system.
83. Yogesh Agarwal's term as pension regulator
cut short: Yogesh Agarwal, chairman of the
Pension Fund Regulatory and Development
Authority (PFRDA), resigned about one-and-a-
half years before the end of his tenure.
84. India's netizens set to be world's second-
biggest internet user base: According to a
report released by the Internet and Mobile
Association of India (IAMAI) and market
research firm IMRB International, by June 2014,
Indians might outnumber American internet
users to become the worlds second-largest
online community after China.
85. Low cost distribution channel needed for
'Bank of future': According to McKinsey report,
Reimagining Banking in India: Gearing up to
meet the new environment, banks need
innovation in their distribution channels to cater
to changing customer preferences, as well as
improve productivity and cost-efficiency. Total


loans (as percentage GDP) extended to all
segments increased 103 per cent, from 0.29 per
cent in 2003 to 0.59 per cent in 2013. However,
despite the presence of nearly 90 scheduled
commercial banks in India, the extent of access is
still low, with about 35 per cent of Indias
population financially excluded, and only 28 per
cent of total bank retail credit being channelled
to rural and semi-urban areas, which constitute
87 per cent of the population. To become a bank
of the future, banking players should innovate in
three aspects---customer insights and
proposition, distribution and risk architecture.
Banks should leverage digital banking to cater to
high-value customers.
86. HRD ministry to set up 120 community
colleges: The human resource development
ministry will set up 120 community colleges,
based on community colleges in the US, to
provide academic and vocational training. India
has a gross enrolment ratio of 19 as compared to
a global average of 29.
87. Life insurers rush to revive lapsed policies: A
policy is considered lapsed if the premium is not
paid within the grace period. According to
Authority (Irda) recommendations, a uniform
grace period of 30 days is extended for annual,
half-yearly and quarterly renewals, and 15 days
for monthly renewals. Renewals not just boost
renewal premiums, but also improve the overall
persistency rates of the life insurers. Persistency
is an indicator of the percentage of policies that
an insurer is able to renew in the 13th, 25th and
37th and 49th month of the policy term.
88. Centre plans 4 solar UMPPs of Rs 90,000 cr:
The Centre has proposed four ultra mega solar
power projects (UMPPs). These would be in
Rajasthan (4,000 Mw), Gujarat (4,000 Mw),
Kargil (2,000 Mw) and Ladakh (5,000 Mw).
These would cost Rs 90,000 crore.
89. Sumit Bose to become finance secretary:
Ratan P Watal is set to be the expenditure
secretary, while Revenue Secretary Sumit Bose
would be finance secretary on the retirement of
R S Gujral towards end of Nov 13.
90. Govt tells states to lower levy rice quota for
PDS: In a move that could increase the supply of
rice in the retail markets, the Centre has directed
states to reduce quota for levy rice, sold for
public distribution system (PDS), from the
existing 30-75 per cent to 25 per cent of the total
produce of millers in the current procurement
season. The government gets the rice for the
central pool to be distributed through PDS by
two ways: Custom-milled and levy rice. In CMR,
the government purchases husked rice from
farmers and then allocates it to mills for
processing for a fixed charge and rebuys again
from them. In the levy rice policy, millers are
allowed to sell a certain percentage (2570 per
cent in major rice producing states) of rice
procured by them in the open market, while the
remaining (called levy rice) is collected by
government agencies at a minimum support
price (MSP).
91. RBI hikes ways and means advances limit of
states: The aggregate normal Ways and Means
Advances (WMA) limit for the state governments
has been increased by 50 per cent to Rs 15,360
crore. The current limit for state governments
and the Union territory of Pondicherry is at Rs
10,240 crore for the year 2013-14.
92. PM's council wants govt to cut stake in banks
to 51%: The Prime Minister's Economic
Advisory Council has recommended phased
dilution of government stake in public-sector
banks, from 58 per cent to 51 per cent, and
introduction of on-tap licensing of new banks.
The stake reduction would help raise the
additional capital required to implement the
Basel III norms.
93. Up to 10,000 killed in Philippines by super
typhoon Haiyan: Super typhoon Haiyan
destroyed about 70 to 80 percent of structures in
its path. Nearly 480,000 people were displaced
and 4.5 million "affected" by the typhoon in 36
provinces.

94. India to host 2 key multilateral meetings: The
first would be a trilateral dialogue between the


foreign ministers of Russia, India and China, or
RIC, staring November 10. India would also host
another key meeting, the Asia-Europe Meeting
(ASEM) from November 11-12, with 36 foreign
ministers and 12 deputy foreign ministers from
Asia and Europe participating. ASEM represents
about 60 per cent of the worlds population, 52
per cent of the global gross domestic product and
68 per cent of global trade.
95. Forex reserves fall to $281.29 bn: India's
foreign exchange reserves fell in the week ending
November 1 by $1.66 billion to $281.29 billion.
96. India Inc sees red on voting rights for
preference shares: The Companies Act, 2013,
gives the same voting rights to preference
shareholders as to equity capital holders. This
will impact voting rights of all those companies
whose preference share capital is larger than
their equity capital. However, the Act is silent on
whether this will be with retrospective or
prospective effect.
97. Centre sets Rs 1-lakh-cr retail loan disbursal
target for PSBs: The finance ministry expects
public sector banks to disburse about Rs
1,00,000 crore of consumer loans at low rates.
98. RBI signs cooperation pacts with central
banks of Australia & NZ: RBI has signed
cooperation agreements with the central banks
of Australia and New Zealand for exchange of
information. With this, the apex bank had signed
such MoUs with 18 supervisors. The MoUs
provided for sharing of information on the health
of the supervised entities, cooperation between
the supervisors during on-site examinations,
frequent meetings between the supervisors and
preserving the confidentiality of information
shared.
99. FinMin shortlists EDs for top job in six govt
banks: The Union finance ministry has
shortlisted the names of executive directors
(EDs) likely to head public sector banks (PSBs) in
2014-15. The banks whose CMDs are likely to
retire in 2014-15 include Bank of Baroda (BoB),
Indian Overseas Bank (IOB), Canara Bank,
Oriental Bank of Commerce (OBC), Vijaya Bank
and United Bank of India.
100. Foreign bank subsidiaries get M&A, branch
freedom: As per guidelines issued by RBI,
Wholly Owned Subsidiaries of foreign banks
could acquire domestic private-sector banks, as
well as set up branches anywhere in the country.
These WOSes might be permitted to enter into
merger & acquisition (M&A) transactions with
any private bank in India, subject to the overall
foreign investment limit of 74 per cent. The
current law permits foreign investors to hold up
to 74 per cent stake in an Indian private bank,
but it does not allow a single entity to own more
than five per cent share in a local lender.
Currently, foreign banks need RBIs permission
to open branches in the country. According to its
commitments to the World Trade Organization,
the central bank is required to allow only 12 new
foreign bank branches in a year. At present, 43
foreign banks have only 334 branches mostly
in cities less than 0.5 per cent of the banking
systems total branch network.
101. Cyprus blacklisted for not sharing tax info:
The Centre has blacklisted Cyprus for not sharing
information about tax evaders. This would make
it difficult for Indian residents to do business
with the tax haven.

JAN 2014

1. Sumit Bose is new Finance Secretary: Sumit
Bose, has been designated as the new Finance
Secretary. He will continue to hold the post of
Revenue Secretary.
2. Harsh Bhanwala is new Nabard Chairman:
The Centre has appointed Harsh Kumar
Bhanwala as Chairman of the National Bank for
Agriculture and Rural Development (Nabard).
Prior to this appointment, Bhanwala was an
Executive Director at India Infrastructure
Finance Company Ltd (IIFCL), a state-owned
infrastructure lender. Bhanwala, succeeds
Prakash Bakshi, who retired as Nabard Chairman
in September.

3. C.V.R. Rajendran appointed CMD of Andhra
Bank: Prior to this elevation, Rajendran was
executive director at Bank of Maharashtra.
4. Arun Tiwari new CMD of Union Bank: The
Union Government has appointed Arun Tiwari as


Chairman and Managing Director of Union Bank
of India. Prior to this elevation, Tiwari was an
executive director at Allahabad Bank.
5. Chairman IBA: K R Kamath is the Chairman of
Indian Banks Association.
6. Gold traders opt for jewellery imports to
tackle curbs on bullion:
7. Though Gold bullion attracts import duty of 10
per cent, and duty on gold jewellery is 15 per
cent, yet conditions attached to bullion imports
like 80:20 scheme, under which merchants were
to re-export 20 per cent of each gold
consignment before ordering fresh shipments
makes import of bullion difficult.
8. Ministry clarifies on role of shares held in
fiduciary capacity: According to Corporate
Affairs Ministry, shares held by a company in a
fiduciary capacity should not be counted for the
purpose of determining holding-subsidiary
relationship. Further, the powers that a company
can exercise in another company in a fiduciary
capacity (only in the capacity as a trustee) will be
excluded for determining holding-subsidiary
relationship.
9. Bank of India plans to get into merchant
banking: Bank of India is planning to enter the
merchant banking space via BOI Shareholding
Ltd. Public sector banks which have a merchant
banking subsidiary include State Bank of India,
IDBI Bank and Bank of Baroda.
10. Pradeep Kumar is new MD of SBI: P. Pradeep
Kumar has been appointed by the Government as
Managing Director of State Bank of India. Prior to
his elevation, Kumar was the Deputy Managing
Director and Group Executive of the Corporate
Banking Group in Indias largest bank.
11. Cabinet nod for cancer institute at Jhajjar: The
Union Cabinet, has approved the proposal to set
up a National Cancer Institute at a cost of Rs
2,035 crore. The institute, which would be set up
at the Jhajjar campus of the All India Institute of
Medical Sciences in Haryana, is likely to be
completed within 45 months.
12. Insurance broking: In major relief to insurance
companies without bancassurance partners, the
finance ministry has asked all public sector banks
to act as insurance brokers to boost insurance
penetration in the country. Currently, insurance
penetration (the ratio of the percentage of total
insurance premia to gross domestic product) is
about five per cent. The ministry has advised
banks to leverage their branch network for
insurance penetration. The corporate agency
model should be done away with and each bank
to train and orient its staff to conform to new
provisions. Currently, bancassurance follows the
corporate agency model, through which a bank
can only tie up with one life, one non-life and one
health insurer to sell their insurance products.
Therefore, non-bank promoted insurance
companies and late entrants to the insurance
sector do not have any bank partner to sell their
policies. As an insurance broker, a bank is liable
to consumers, in terms of an insurance policy,
unlike a corporate agent. The liability is high,
especially as the bank will sell products of
multiple insurers. The customers will now have
more choice while buying insurance from banks.
The Finance Ministry has set January 15 as the
deadline for banks to start selling products of
more than one insurance company.
13. 8.8 m families live in urban slums: As per a
survey conducted by National Sample Survey
Office (NSSO), about 8.8 million household in
India live in urban slums. A total of 33,510 slums
are present in urban India, of which 41 per cent
are notified as slums by the concerned
municipalities, corporations, local bodies or
development authorities which accommodate
about 63 per cent of all slum-dwelling
households. Maharashtra, accounts for 23 per
cent of all slums in the country. With 13.5 per
cent of slums, Andhra Pradesh comes second,
followed by West Bengal (12 per cent).
14. Over 80% of rural homes have power, but
60% have no toilets: As per Government data,
80 per cent of rural households and 97.9 per cent
urban households had electricity for domestic
use, and 88.5 per cent households in rural India
and 95.3 per cent in urban areas had improved
source of drinking water. The percentage of
households who get drinking water facilities
within premises was 46.1 per cent in rural India
and 76.8 per cent in urban India while about 62.3
per cent of rural households and 16.7 per cent of
urban households did not have any bathroom
facility. 59.4 per cent and 8.8 per cent households
in rural and urban India, respectively, had no
latrine facilities.
15. Govt draws up list of 23 countries for
currency swap arrangement: The Commerce
Ministry has finalised a list of 23 countries with
which India can trade in local currencies to save
precious foreign exchange and strengthen the
rupee. The list includes oil exporting nations such
as Angola, Algeria, Nigeria, Oman, Iran, Iraq,
Venezuela, Qatar, Yemen and Saudi Arabia. Other
countries on the list include Russia, Japan,
Singapore, Australia, Indonesia, South Korea,
Malaysia, Mexico, South Africa and Thailand. A
currency swap arrangement for trade basically
involves trading in local currencies where
countries pay for exports and imports with


domestic currencies at pre-determined exchange
rates instead of trading in US dollars.
16. Women gaining ground in banks financial
inclusion: The share of female depositors has
increased to 28 per cent of the total number of
individual deposit accounts in 2012 against 24
per cent in the previous year. The total number of
individual deposit accounts in the country stood
at 77.32 crore in 2012 against 72.50 crore in the
previous year. In terms of amount, womens
share in the total individual deposits has
improved to 26 per cent in 2012 from 22 per cent
in 2011. In 2012, individual deposits aggregated
Rs 30.78 lakh crore against Rs 28.05 lakh crore in
the previous year. The share of female loan
accounts in the total number of loan accounts has
gone up to 15.82 per cent in 2012. Womens
share in the total outstanding loans (individuals)
has risen to 18 per cent in 2012 against 15 per
cent in 2011. The total outstanding loans in the
case of individuals aggregated Rs 11.69 lakh
crore in 2012 against Rs 9.63 lakh crore in 2011.
17. Insurance policy will cost more from Jan 1:
The Government has widened its service tax net
to cover the policy premiums paid. Service tax
rates will be 12.36 per cent on Unit-Linked
Insurance Polices (only on charges, such as
mortality and administration), 3.09 per cent on
traditional products as most of the premium goes
into savings, and 12.36 per cent on term plans.
18. SEBI proposes framework for infra trusts: To
aid the financing and refinancing of long-term
infrastructure projects in India, the capital
market regulator SEBI has proposed a
framework for the introduction of infrastructure
investment trusts (InvIT). According to the 12th
Five Year Plan, India requires an investment of
Rs 65 lakh crore in infrastructure between 2012
and 2017. SEBI suggested that the trust could
either be floated using the mutual fund structure
or through a separate structural framework.

19. Consumer inflation linked bonds: Inflation
Indexed National Savings Securities - Cumulative,
seek to protect savings from price rise, by
offering returns over and above inflation at the
retail level. Only retail investors can buy these
bonds. The minimum investment size is Rs 5,000.
The interest rate is the sum of the prevailing
inflation based on the combined consumer price
index (CPI) and a fixed rate of 1.5 per cent
annually. The inflation rate will be reckoned with
a lag of three months, with the September CPI
used in December, and so on. Interest on the
bonds will not be paid out but compounded on a
half-yearly basis.
20. SME varsity to come up in Hyderabad: A
national Small and Medium Enterprises (SME)
university will be soon set up at Hyderabad.
Another technical training institute was also
being set up in Visakhapatnam at an investment
of over Rs 150 crore.
21. Sidharth Birla is new FICCI President: Sidharth
Birla was elected as President, FICCI, after the
industry chambers 86
th
Annual General
Meeting.
22. Misuse of bank guarantees, letters of credit
on the rise: Due to rising incidents of frauds,
banks are not in favour of issuing non-fund based
facilities, such as bank guarantees and letters of
credit, to non-customers.
23. CCEA ups gas price for RIL subject to bank
guarantee: The Cabinet Committee on Economic
Affairs (CCEA) approved a Petroleum and Natural
Gas Ministry proposal to allow RIL to sell KG-D6
block gas at the new price effective April 2014. It
also decided against putting any cap/floor price
on the gas rates and to maintain the gas price
formula approved earlier. RIL can now get the
benefit of the revised gas price in return for a
bank guarantee for the unmet supply
commitment from its KG-D6 block.
24. Cabinet approves Rs 6,600-cr interest-free
loans for sugar mills: The Cabinet Committee
on Economic Affairs has approved Rs 6,600 crore
interest free loans to sugar mills to ease their
cane payment burden. The CCEA also approved
the exports of sugar without any quantitative
restrictions.
25. Lok Sabha passes landmark Lokpal Bill: The
Parliament on 18
th
Dec passed the Lokpal Bill,
paving the way for the setting up of anti-
corruption watchdogs at the Centre and State
level. The Bill was passed by Lok Sabha on 18
th

Dec and by Rajya Sabha on 17
th
Dec. Highlights of
the Bill include (a) The Lokpal will consist of a
chairperson and a maximum of eight members, of
whom half will be judicial members; (b) Fifty per
cent of the Lokpal members shall be SC/ST/OBCs,
minorities and women; (c) The chairperson and
members will be chosen by a selection committee
consisting of the Prime Minister, Speaker of the
Lok Sabha, Leader of the Opposition in the Lok
Sabha, Chief Justice of India or a sitting Supreme
Court judge nominated by the CJI, and an
eminent jurist to be nominated by the President
of India on the basis of recommendations of the
first four members of the selection committee;
(d) The jurisdiction will include all categories of


public servants and incorporate provisions for
attachment and confiscation of property acquired
by corrupt means, even while prosecution is
pending; (e) Setting up of Lokayuktas through
enactment of a law by the State Legislature
within 365 days from the date of commencement
of the Act.

26. Rename company secretaries as governance
professionals: The Company Secretaries
Institute has written to the Corporate Affairs
Ministry suggesting that their members may be
rechristened as governance professionals.
27. Status quo on repo rate, CRR: RBI maintained
status quo on the repo rate at 7.75 per cent and
cash reserve ratio (CRR) at 4 per cent in its policy
announced on 18
th
Dec. Explaining the rationale
for not hiking the rate in the mid-quarter policy,
RBI Governor stated that both retail and
wholesale inflation have increased mainly on
account of food prices and vegetable prices are
likely to fall both at the wholesale and retail
levels.
28. Tesco to invest $100 million in multi-brand
retail stores: British retailer Tesco Plc became
the first global retailer to seek the Governments
nod to enter multi-brand retail trade segment.
Tesco plans to pick up a 50 per cent stake in
Trent Hypermarket Ltd, a retail arm of the Tata
group, and enter the multi-brand retailing arena.
The stores will operate under the names Star
Bazaar, Star Daily or Star Market, and the first
few will come up in Maharashtra and Karnataka.
29. RBI plans carrot-and-stick approach to curtail
bad loans: To spur banks/financial institutions
to agree collectively and quickly to a plan of
resolution of stressed assets, RBI may consider a
liberal regulatory treatment including spreading
the loss on sale of the asset over a period of two
years; allowing takeout financing/refinancing
over a longer period and not considering the
same as restructuring. In case lenders cannot
reach an agreement on resolution of stressed
assets then they will be subject to accelerated
provisioning. Before a loan account turns into a
non-performing asset (NPA), banks should
identify incipient stress in the account by
creating a new sub-asset category Special
Mention Accounts (SMA) - a standard account,
which is moving towards the substandard
category. SMA will have three sub-categories
SMA-NF (classified on the basis of non-financial
signals); SMA-1 (when principal or interest
payment is overdue between 31-60 days); and
SMA-2 (when principal or interest payment is
overdue between 61-90 days). The RBI also plans
to set up a Central Repository of Information on
Large Credits (CRILC) to collect, store, and
disseminate credit data to lenders. Banks will
have to furnish credit information to CRILC on all
their borrowers having aggregate fund-based
and non-fund-based exposure of Rs 5 crore and
above. Systemically important non-banking
finance companies (NBFC-SIs) will also be asked
to furnish such information. In addition, banks
will have to furnish details of all current accounts
of their customers with outstanding balance
(debit or credit) of Rs 1 crore and above. The
reporting of an account as SMA-2 by one or more
lending banks/NBFC-SIs will trigger the
mandatory formation of a Joint Lenders Forum
(JLF) and formulation of Corrective Action Plan
(CAP). JLF formation would be made mandatory
for distressed corporate borrowers with
aggregate fund-based and non-fund based
exposure of Rs 100 crore and above. The options
under the CAP by the JLF would generally
include: rectification (for regularising the loan
account), restructuring and recovery (when the
first two options fail).
30. Relief to banks on asset sales to ARCs: As per
RBI, the excess provision on any bad loan which
is sold to an asset reconstruction company (ARC)
for a higher value can be reversed to the banks
profits.
31. Inflation hits 14-month high: Surging food
prices pushed November wholesale price index-
based inflation to a 14-month high of 7.52 per
cent. Food inflation shot up a huge 19.93 per cent
a near-four-year high. It had risen 18.19 per
cent in October. Vegetable prices shot up an
alarming 95.25 per cent in November compared
with 78.38 per cent in the previous month.
32. India for food security subsidies out of WTO
actionable sops ambit: India will push for
complete exclusion of subsidies given under
public stock holding programmes from the
category of actionable subsidies at the World
Trade Organisation. India has managed to get
only an interim reprieve from legal action against
such breaches at the recently concluded
Ministerial Meeting in Bali.
33. Third home loan as a commercial real estate
advance: The National Housing Bank has
suggested to the Finance Ministry that home
loans provided to a borrower for the third time
should not be treated as commercial real estate
advance. According to R. V. Verma, Chairman and
Managing Director, NHB, such an approach


would help improve housing stock in the country
and also give a fillip to the rental housing market.
NHB is the housing finance regulator of the
country.
34. SMS alerts: Banks prefer to charge a flat rate:
Instead of linking the charges to the number of
transaction alerts received by customers, banks
are weighing the possibility of recovering Rs 5-10
a month from those opting to receive the alerts
via SMS.
35. Centre to review RBI powers as part of
financial sector reforms: The Financial Sector
Legislative Reforms Commission (FSLRC) has
proposed a financial regulatory mechanism
comprising the RBI, Unified Financial Agency,
Financial Sector Appellate Tribunal, Resolution
Corp, Financial Redressal Agency, Public Debt
Management Agency and the Financial Stability
Development Council. Under the proposed
regulatory structure, the RBI will perform the
functions of monetary policy, regulation and
supervision of banking and payment systems.
The Financial Stability Development Council will
function in the systemic risk and development
category.
36. I-T dept stakes claim to Kingfisher assets: The
Income Tax Department has said a consortium of
banks cannot stake any claim to the assets of
Kingfisher Airlines until the departments dues of
over Rs 350 crore are settled.
37. Govt offers more concessions under rural jobs
scheme: Union Minister for Rural Development
Jairam Ramesh has announced that (a) every
job card holder under MNREGA, will be entitled
to Rs 10,000 to build an individual toilet. At
present, a job card holder can avail Rs 4,500 to
build a toilet; the Centre will provide assistance
for the construction of buildings for women self-
help federations; MNarega scheme will be
converged with the Indira Awas Yojana and other
housing schemes for the poor; (d) to allow the
building of community storage facilities for
agriculture produce in gram panchayats to link
the MGNREGS with the Food Security Scheme; (e)
if wages are delayed beyond 15 days,
compensation at 0.05 per cent of wage per day of
delay will be paid and this amount will be
deducted from the salary of the responsible
personnel.

38. Public sector banks may have to set up
insurance broking arms by February: At
present, banks are allowed to tie up with only
one insurance company and sell products of only
that insurer under the corporate agency
(bancassurance) channel. According to Financial
Services Secretary Rajiv Takru, all insurance
products should be available through the one-
lakh-plus bank branches. According to the
guidelines finalised by the Insurance Regulatory
and Development Authority, as brokers, banks
will have to cap business from their own group
companies at 25 per cent for life insurance and a
similar cap for non-life insurance business. Most
major public sector and private sector banks,
such as State Bank of India, Union Bank of India,
Bank of Baroda, Canara Bank, Bank of India,
Punjab National Bank, Andhra Bank, ICICI Bank
and IDBI Bank, have promoted insurance
companies. Most banks are not in favour of
broking as many of them had promoted
insurance companies. Also, they will have
fiduciary responsibility towards the customer
while selling insurance products under the
broking regulation.
39. ATM density still low in India: According to RBI
data outlining global financial inclusion
indicators for 2011, there are just 25.4 machines
in every 1,000 sq. km in India. This translates
into 8.9 ATMs for every one lakh population, one
of the lowest densities in the world. Bank
customers in China have access to 2,975
machines in the same geographical expanse, with
49.6 ATMs per one lakh population. In UK, ATM
density stands at 261 per 1,000 sq km. But the
number of ATMs per 1 lakh population is higher
at 122.8 ATMs. ATM density in populous
Malaysia stands at 34 per 1,000 sq km, with 56.4
machines per 1 lakh population. While the
density in terms of machines per 1,000 sq km is
lower in countries, such as Indonesia, Mexico and
the Philippines, they have more machines per
one lakh people owing to the lower population.
However, in terms of bank branch density, India
fares better than many developing countries.
Bank branch density in India is 30.4 per 1,000
km, compared to just 9.6 in the US, 3.1 in South
Africa and 7.9 in Brazil. China ranks highest in
terms of bank branch density.
40. Funding for specialised entities: RBI, in its
discussion paper on resolution of NPAs, has
stated that RBI will allow banks to extend finance
to specialised entities put together for
acquisition of troubled companies. However, the
lenders should ensure that these entities are
adequately capitalized. The Reserve Bank will
withdraw the minimum holding period for any
initial loan sale. However, the bank purchasing


the NPA will have to hold the asset in its books
for at least one year before selling the asset.
41. Curbs on firms roping in directors who are on
boards of wilful defaulters: The provisioning
in respect of existing loans/exposures of banks to
companies having director/s, whose name/s
appear more than once in the list of wilful
defaulters, could be set higher at 5 per cent in
case of standard accounts (against the usual
provisioning of 0.40 per cent for standard
accounts).

42. Coal Regulatory Authority Bill tabled: A Bill to
establish an independent regulatory authority for
effective monitoring and regulation of the coal
sector has been introduced in the Lok Sabha. The
objective of the proposed coal regulatory
authority include putting in place regulation that
will be a counter to the practices and methods of
a monopolistic producer of coal.
43. Banks may soon begin charging customers for
ATM usage: To make good the expenses
incurred on beefing up security, banks are
considering levying a charge on all ATM
transactions, be it a cash withdrawal or a balance
enquiry. Currently, all transactions by customers
at their banks ATMs are free. The first five
transactions in a month at other ATMs are also
free. According to initial estimates, the cost per
transaction works out to Rs 6 on the basis of an
average of 200 transactions in each of the
100,000-plus ATMs across the country.

44. Factory output falls, retail inflation rises:
Retail inflation surged to 11.24 per cent in
November (10.17 per cent in October). Factory
output contracted in October to 1.8 per cent,
though this was partly because of the base effect
in October 2012, IIP growth was at a multi-
month high of 8.2 per cent.
45. Govt plans education loans to minority
communities for overseas study: Under Padho
Pardesh (study abroad) scheme, interest subsidy
will be given on education loans taken by
meritorious students belonging to economically
weaker sections of notified minority
communities Muslims, Christians, Sikhs,
Buddhists and Zoroastrians (Parsis). The Padho
Pardesh scheme is being put together by the
Ministry of Minority Affairs and the Finance
Ministry to provide minority community
students with better opportunities for higher
education (Masters and Ph.D level) abroad and
enhance their employability. Thirty per cent of
the benefit under the scheme will be reserved for
female candidates.
46. IOB gets RBI nod to open second branch in
Bangkok: Indian Overseas Bank (IOB) has
received RBI approval for opening a second
branch in Bangkok. IOB is the only Indian lender
to have a branch presence in Bangkok.
47. Export growth slows to 5.86% in November:
Exports grew at a slower pace in November, at
5.86 per cent, from double-digit increases posted
in the four preceding months. This was mainly
due to a drop in shipments of gems and jewellery,
petroleum products and pharmaceuticals. The
trade deficit, however, shrank to $9.2 billion,
easing pressure on the countrys current account
deficit as imports posted a sharp decline of 16.37
per cent during the month. However, the
Commerce Ministry is confident of reaching the
export target of $335 billion for 2013-14.
48. SBI plans study on customer experience: In a
bid to assess the current level of customer
satisfaction and experience, State Bank of India is
planning to conduct a study across key areas
such as products, channels and processes. To be
conducted across all 14 circles, the study will
identify opportunities to improve customer
experience across various areas and benchmark
SBIs processes and service against best-in-class
banks in India and overseas.
49. Power tariffs may drop as norms for
producers are tightened: Electricity rates may
see a marginal drop if the draft regulations on
power tariffs, issued by the Central Electricity
Regulatory Commission (CERC), are approved.
CERC reviews tariff regulations every five years.
The existing regulations (2009-14) will expire on
March 31.
50. Tata Hall opens at Harvard Business School:
Tata Hall was funded by a $50-million gift
donated by the philanthropic subsidiaries of Tata
Group the Sir Dorabji Tata Trust and the Tata
Education and Development Trust.
51. Garment exports up 15% in April-Oct: Apparel
exports have grown 15.5 per cent the first seven
months of the fiscal to $8.2 billion due to revival
of demand in the US and the EU.
52. More remittances directed towards
investment purposes: As per a study by RBI, in
2012-13, the share of transactions with an
average size of individual remittance of Rs 1 lakh
and above was relatively higher at 45 per cent of


the total value of remittances against 27 per cent
in 2009-10. The trends seem to suggest that over
the years, a higher proportion of remittances are
being directed towards investment purposes.
About 57 per cent of the total remittance inflows
are received in terms of dollar, while 16 per cent
of remittances are received in Saudi riyal and
UAE dirham. The share of Euro and pound
sterling are 7 per cent and 8 per cent,
respectively. According to the survey, SWIFT
(Society for Worldwide Inter-bank Financial
Telecommunication) is the costliest means of
transferring funds.
53. RBI hits the jackpot with dollar deposit
scheme: Banks have managed to mobilise $34
billion in foreign currency deposits since the
special swap scheme was flagged off in
September. This is much higher than the sums
raised by the Resurgent India Bonds (RIBs) of
1998 ($4.2 billion) and the India Millennium
Bonds ($5.5 billion).
54. MFI customers to be given credit scores:
Equifax Credit Information Services, a credit
information company, is offering scores to help
understand the credit profile of microfinance
customers. The product is called Equifax MFI
Risk Score. Through this product, a microfinance
institution that is a member of ECIS, can obtain
credit reports of its customers.
55. Ministers panel okays Rs 7,200-crore soft
loans for cash-strapped sugar mills:
56. A panel of senior Union ministers, which
considered the demands of the sugar mills, has
decided a soft loan of Rs 7,200 crore to settle the
amounts due to sugarcane farmers. The loan will
be given at 12 per cent interest rate to the sugar
mills.

57. WTO adopts historic Bali package: The World
Trade Organisation (WTO) Ministers at Bali
adopted the historic five-draft decision
declaration and the 10-document full Bali
Package that addresses the Doha Development
Agenda. The draft proposes an interim
mechanism for safeguarding minimum support
prices to farmers against WTO caps till a
permanent solution is found and adopted.
58. Defaults on commercial vehicle loans on the
rise: According to India Ratings & Research
report, the performance of commercial vehicle
loans touched a new low in the third quarter (to
September 30) of the ongoing calendar year. The
Fitch Groups credit rating agency, in its
quarterly analysis, found that even creditworthy
borrowers may not remain insulated in times of
economic slowdown.
59. House panel opposes bank licences to
industrial houses: As per the Standing
Committee on Finance, RBI should desist from
giving new bank licences to industrial houses.
60. Rebound in FDI flows into India: In its World
Investment and Political Risk Report, by World
Bank, the foreign direct investment (FDI) flows
received by India in the January-March 2013
period reflects a rebound in inflows. This is a
result of the new investment policies put in place
for select sectors, such as telecoms and
insurance. India is by far the largest recipient of
FDI in South Asia, comprising India, Pakistan, Sri
Lanka and Bangladesh. The growth of FDI flows
into developing economies has been dominated
by Brazil, China, and India. In 2012, China
received 10.5 times more FDI than India. While
India received $24 billion, China received $253.5
billion.
61. Moodys outlook turns bleak for India Inc:
Moodys Investors Service said its outlook for
Indian corporates (non-financial) is negative,
reflecting macro-economic challenges over the
next 12 months. It also expects the rupee to
remain volatile due to heightened expectations of
a scale-back of quantitative easing by the US
Federal Reserve in 2014. This could make the
operating environment more challenging for
importers and exporters.
62. SBI asks officers to meet loan-seekers only at
branch: To ensure that the dealings of its officers
are more transparent, State Bank of India has
asked them not to meet the borrowers, existing
as well as prospective, at any location other than
the branch. An officer should hold meetings with
the borrower only in the presence of other
officers. One-on-one meetings and meetings at
the residence of either the officer or the
borrower should be avoided. Further, talks
between the bank staff and the borrower, who
may come for a loan/enhancement of loan limit/
one-time compromise settlement of a loan that
has gone sour, should ideally be video recorded.
The emphasis on transparency in officers
dealings with borrowers comes in the wake of
the Central Bureau of Investigation recently
registering a case against SBI Deputy Managing
Director Shyamal Acharya, Chairman of a New
Delhi-based private company and others in an
alleged bribery case.
63. Asset quality of banks will worsen by March
2014: According to a report by credit ratings
agency ICRA, the asset quality of the banking


sector is set to worsen with gross non-
performing assets (NPAs) ratio likely to end at
4.2-4.4 per cent by March-end 2014 from 4 per
cent in September 2013. The absolute gross NPAs
may deteriorate to Rs 2.70-2.90 lakh crore by
March 2014 from 2.37-lakh crore in September
this year.
64. Mulling automation to cut operational costs of
no frills accounts: The State Bank of India (SBI)
is looking to develop an automated system that
will help minimise the operational costs of no
frills or zero balance savings accounts. These
zero balance accounts, has led to higher
operational costs but has not resulted in an
improvement in the CASA (current and savings
account) ratio.
65. Timely, accurate data not coming from banks,
FIs: According to CIBIL chief, inadequate and
poor quality data from financial institutions is a
challenge for credit health assessing agency.
CIBIL has four divisions or bureaus retail,
commercial, mortgage and frauds through
which it serves banks, other financial institutions
and telecom companies. It will soon launch a
microfinance division, to offer credit
information to microfinance institutions. The
bureau currently has over 320 million records
from the retail bureau predominantly (305
million) and the commercial bureau (15 million).
66. Mahila Bank mulls childcare allowance for
women staff: The Bharatiya Mahila Bank is
planning to give childcare allowance to its
women employees. The proposed move is aimed
at attracting and retaining talent, especially
women employees in the junior management
grade (entry-level officer) and middle
management grade (officers of the rank of
manager and senior manager) in Indias first
womens bank in the public sector.

67. Create awareness among consumers: RBI has
advised credit information companies (CICs) to
create awareness among consumers about credit
behaviour and credit scores to manage their
finances better. India stands at 28
th
rank amongst
189 countries on the ease of getting credit and
has the best ranking amongst the BRICS
economies China is at 73, both Russia and
Brazil are at rank 109.
68. Current account deficit narrows to 1.2% of
GDP: With a pick up in merchandise exports and
a dip in imports, the countrys current account
deficit narrowed sharply to a more manageable
1.2 per cent of GDP in the second quarter. CAD
the excess of all goods, services and transfers
imported in a period over the total exports fell
to $5.2 billion in the July-September quarter from
$21 billion in the year-ago period. This was also
lower than the CAD of 4.9 per cent of GDP in the
previous quarter, ended June 30, 2013.
69. Core industries output declines 0.6% in Oct:
After a robust 8 per cent rise in September, the
eight core industries output contracted 0.6 per
cent in October. The eight core industries coal,
crude oil, natural gas, refinery products,
fertilisers, steel, cement and electricity had
recorded a 7.8 per cent growth in output in
October last year.


70. Odisha displaces Gujarat as Indias most
attractive State for investment: The State
accounts for over one-fifth of project proposals
across the country in the first 10 months of the
year, which were cumulatively valued at Rs 4.7
lakh crore, according to Department of Industrial
Policy and Promotion (DIPP) data.
71. To ensure stability, RBI wants banks to build
up capital buffer: In its draft report on
implementation of counter-cyclical capital buffer
(CCCB) regime in India, the RBI said it will
endeavour to ensure that individual banks
remain solvent through periods of stress. The
regime also seeks to ensure that the banking
sector has capital in hand to help maintain the
flow of credit in the economy during economic
downturns and periods of stress.

72. Mobile payments are gaining currency: Latest
data show there has been a 15-fold increase in
immediate payment service (IMPS) amounts
transferred using mobile phones between
September 2012 and July 2013, as well as a
seven-fold rise in the number of transactions.
Seventeen million of the 870 million mobile
phone users in India now access banking services
through their mobile phones.
73. Systemically important banks should
maintain higher tier 1 capital: According to
draft framework by RBI, Domestic-Systemically
Important Banks (D-SIBs) will have to maintain
additional common equity Tier 1 capital ranging
from 0.20 per cent to 0.80 per cent of their risk-
weighted assets. Common equity tier (CET) 1
capital includes common shares; share premium
resulting from the issue of instruments, including
CET 1; and retained earnings. The banks having a
size of beyond 2 per cent of GDP will be selected
in the sample of banks.
74. M. V. Tanksale is IBAs new chief executive:
M.V. Tanksale, former Chairman and Managing
Director of Central Bank of India, has taken over
as Chief Executive of the Indian Banks
Association
75. RBI move permitting banks entry into
insurance broking biz hailed: It will expand
coverage and offer more choice to customers. As
per RBIs draft guidelines, banks will be
permitted to undertake insurance broking
business departmentally. For undertaking the
business, a banks capital-to-risk weighted assets
ratio (CRAR) should not be less than 10 per cent
(as against the regulatory minimum of 9 per
cent); and its net non-performing assets ratio
should not be more than 3 per cent. Further, the
bank should have made profits for the last three
consecutive years; its net worth should not be
less than Rs 500 crore; and the track record of
the performance of the subsidiaries/ joint
ventures, if any, should be satisfactory.

FEB 2013

1. Fiscal deficit hits 95% of estimate in 9 months:
According to data published by the Controller
General of Account, the total deficit at the end of
December touched Rs. 5.16-lakh crore, which is
95.2 per cent of the budget estimate of Rs. 5.42-
lakh crore.
2. GDP growth in 2012-13 scaled down to
decadal low of 4.5%: The downward revision
has been prompted by lower than provisionally
estimated agricultural and manufacturing output.
The revised GDP growth of 4.5 per cent is a
decadal low the previous low of 4 per cent was
recorded in 2002-03. The CSO has however
raised GDP growth for 2011-12 to 6.7 per cent
(second revised estimate) from 6.2 per cent.
Economic growth for 2010-11 was lowered to 8.9
per cent (third revised estimate) from 9.3 per
cent projected earlier. According to the first
revised estimate of national income for 2012-13,
agricultural growth stood at 1.4 per cent (5 per
cent in 2011-12), and mining declined 2.2 per
cent (0.1 per cent growth in 2011-12).
3. Core industries output up 2.1%: The latest
output of the eight core industries coal, crude
oil, natural gas, refinery products, fertilisers,
steel, cement, electricity was however lower
than 7.5 per cent growth recorded in December
2012. In April-December 2013, eight core
industries output grew a mere 2.5 per cent
against 6.8 per cent in same period year. Coal
output fell (-) 0.6 per cent in December year-on-
year. Petroleum refinery production shrank by (-
) 1.7 per cent.
4. Banks to rethink fee on ATM use: One of the six
action points mooted at a recent annual Banking
Ombudsmen conference related to fee on ATM
use. In order to provide enhanced security at


ATMs, banks plan to cap the number of free ATM
transactions to five a month, irrespective of
whether customers use their own bank or
another banks ATMs. RBI Deputy Governor KC
Chakrabarty had said it would be unfair to charge
customers transacting at their own banks ATMs.
The practice of levying a penalty for non-
maintenance of a minimum balance in ordinary
savings bank accounts was also discussed at the
conference. Henceforth, banks may consider
converting such accounts into Basic Savings Bank
Deposit accounts. The IBA may issue instructions
to discontinue levying a pre-payment penalty on
all floating-rate loans. Further, it has to ensure
that fixed rate loans are truly fixed and not
referenced to any floating rate benchmark. Banks
and the IBA will also formulate a policy on zero
liability of customers in electronic banking
transactions, when a bank is unable to establish
customer-level negligence. The onus of proving
customer-level negligence would be on the bank
and when such negligence is not established
beyond doubt, the benefit of such doubt may be
given to the customer.
5. Need for more specialised banks: According to
Mr Nachiket Mor, Chairman of the RBIs
committee on financial inclusion, there is a need
to have specialised banks compared to new full
service banks. The idea of financial inclusion will
be better served in the medium term if
specialised banks like the payments only bank
and lending only banks are allowed to flourish.
6. RBI working on early warning system for bad
loans: The framework to revitalise distressed
loans in the economy will be fully effective from
April 1. The framework has been envisaged as
there is a need to ensure that the banking system
recognises financial distress early, takes prompt
steps to resolve it, and ensures fair recovery for
lenders and investors. The main proposals of the
framework include early formation of a lenders
committee with timelines to agree to a plan for
resolution. Main proposals include (a) Lenders
will be given incentives to agree collectively and
quickly work out a debt resolution plan; better
regulatory treatment of stressed assets if a
resolution plan is underway and accelerated
provisioning if no agreement can be reached; (b)
To improve the current restructuring process,
the framework wants independent evaluation of
large-value restructurings mandated, with a
focus on viable plans and a fair sharing of losses
(and future possible upsides) between the
promoters and the creditors; (c) Borrowing could
become more expensive if borrowers do not co-
operate with lenders in resolution. Lenders will
be given more liberal regulatory treatment for
asset sales; (d) Lenders can spread the loss on
sale over two years provided the loss is fully
disclosed. Further, take-out financing /
refinancing will be possible over a longer period
and will not be construed as restructuring; (e)
leveraged buyouts allowed for specialised
entities for acquisition of stressed companies.
Sector-specific companies / private equity firms
will be encouraged to play an active role in the
stressed assets market.

7. FDI inflows into India in 2013 rose 17% to
$28 billion: According to the UN Conference on
Trade and Development (Unctad) report for
2013, FDI during the year rose 11 per cent to
$1.46 trillion which is the highest since the start
of the global economic crisis in 2008. Unctad
forecasts that FDI flows will rise gradually in
2014 and 2015, to $1.6 trillion and $1.8 trillion,
respectively, indicating that the worst may be
over for the crisis-ridden global economy in
terms of foreign investment flows. Global FDI
inflows in 2012 had shrunk 18 per cent to $1.31
trillion due to the weakening macroeconomic
environment, slow growth in trade, GDP and
employment. India attracted FDI worth $27.3
billion in 2012 which was 13.5 per cent lower
than $31.5 billion worth of FDI attracted in 2011.
Brazil, Russian Federation, India, China and
South Africa, popularly known as the BRICS
economies, accounted for 22 per cent of global
FDI flows, which was nearly twice that of their
pre-crisis level.
8. Trade deficit with China set to touch $40 b:
According to data from Directorate-General of
Foreign Trade, Indian exports to China touched
$9 billion between April-November 2013, while
imports totalled $34.5 billion.
9. IRDA officials meet RBI, bank chiefs to discuss
concerns over insurance broking: The
concerns relate to taking the broking route for
selling insurance policies. Three major concerns
of banks relate to their contracts with joint
venture partners, equity arrangement and non-
compete clause with insurance companies. The
other major concern is the IRDA provision that
banks will have to cap business from their own
group companies at 25 per cent for life insurance
with a similar cap on non-life insurance business
too. Banks, as insurance brokers, will also have a
fiduciary responsibility to the customer for the
policies sold by them. However, banks can take a


professional indemnity policy to cover their
liabilities. By selling products of multiple
insurers, the customer will have more choice and
will be able to choose the product best suited to
his needs rather than the insurers product with
whom the bank has a an exclusive tie up. Under
the present system of distribution of insurance
products through bank branches
(bancassurance), banks act as corporate agents
and sell the policies of only one life insurer, one
non-life insurer and a standalone health insurer.
10. Currency notes issued before 2005 to be
withdrawn: RBI has decided to withdraw
banknotes printed prior to 2005. The rationale
behind move to withdraw banknotes printed
prior to 2005 is to remove them from the market
as they have fewer security features compared to
banknotes printed after 2005. The public can
easily identify the notes to be withdrawn as the
notes issued before 2005 do not have the year of
printing on the reverse side. The recall of
banknotes comes in the backdrop of rising cases
of counterfeit currency and the role of black
money in stoking inflation in the economy.
According to RBI, it is standard international
practice to withdraw old series notes. Between
April 1 to June 30, 2014, banks will exchange
these notes both for customers and non
customers. From July 1, 2014, members of public
can exchange any number of these old series
notes from the bank branches where they have
their accounts. However, to exchange more than
10 pieces of Rs 500 and Rs 1000 notes, non-
customers will have to furnish proof of identity
and residence to the bank branch in which
she/he wants to exchange the notes. The notes
printed prior to 2005 will continue to be legal
tender.
11. Nanda Kumar is next NDDB chief: Nanda
Kumar, currently Member of the National
Disaster Management Authority, is slated to take
over as Chairman of NDDB from March 1. Nanda
Kumar will be the first ever person from the
Indian Administrative Service to hold the
position of NDDB Chairman.
12. NBFCs should form a single representative
body: RBI has advised NBFCs to form a single
representative body with the exception for
microfinance where the RBI is keen on a self-
regulatory organisation to cater to this segments
needs. The RBI now regulates as many as 10
categories of NBFCs, including those engaged in
asset financing, gold loans, micro-finance, credit
information companies, factoring and residuary
NBFCs. Currently, different segments of NBFCs
have separate associations to pursue their
interests.

13. Moodys ups growth to 5.5% in 2014: The
report titled India Outlook: Steady Growth,
Lower Risk highlighted there is growing list of
reasons to believe that the Indian economy has
started to turn the corner, albeit slowly, after 30
months of sub-par growth. A pick-up in exports
and normal monsoon besides the prospect of a
better Government after the May election have
boosted business sentiment and investor
confidence. Both the World Bank and
International Monetary Fund have said that the
world economy is showing signs of bouncing
back this year. While the World Bank has forecast
global growth of 3.2 per cent, the IMF has now
projected global growth to be higher at 3.7% in
2014. For 2015, IMF sees global growth at 3.9%.
14. 6% inflation target in 2 years will raise
interest rates: The expert committee set up to
revise and strengthen the monetary policy
framework, headed by Urjit Patel has suggested
that RBI will try to bring down inflation gradually
from 10 per cent to 8 per cent over the next 12
months and to 6% over the next 24 months
before formally adopting the recommended
target of 4 per cent ination with a band of +/-2
per cent around it. If the RBI accepts the
recommendations of the Urjit Patel Committee,
interest rates are unlikely to come down in 2014-
15 even if the RBI removes its current restriction
on bank borrowing through the repo window.
The committee has also advocated that the real
policy rate should be positive, implying that the
repo rate (currently at 7.75 per cent) should be
higher than the expected CPI inflation (expected
to average around 8.5 per cent in 2014-15). The
report is a step in the right direction as inflation
leads to distortion of facts, such as savings
behaviour, investment decisions and export
competitiveness. Hence, bringing down inflation
cannot be debated for growth.
15. All branches of IDBI Bank to offer export
credit: These branches also support the export
credit (both in foreign currency and rupees)
requirements of exporters-customers of the
1,050 branches.
16. Panel to review commodity futures market
liberalization: The Finance Ministry has set up a
5-member panel to examine whether the
objectives of price discovery and risk
management, which motivated liberalisation of
the commodity futures market, have been


achieved or not. The panel may look at the merits
of liberalisation of the commodities futures
market even from the aspect of inflation
management. India had till early 2000 banned
trading in commodities futures. But
progressively from 2002, all commodities were
permitted for futures trading purely as a
hedging mechanism. But options contracts are
still banned.

17. Banks can now lend up to 75% of value of
pledged gold: RBI has allowed banks to lend
more against pledged gold jewellery, thereby
creating a level-playing field for them vis--vis
gold loan companies which can also lend up to 75
per cent of the value of pledged gold jewellery
against the earlier 60 per cent. By allowing banks
and NBFCs to lend more against the pledge of
gold jewellery, the central bank may be trying to
break the shackles of the unorganised sector in
the business of lending against gold.
18. RBI committee to review governance of bank
boards: The committee will review the
regulatory compliance requirements of the board
of directors of banks, judge what can be
rationalised and where requirements need
enhancements, examine the working of the
boards, including whether adequate time is being
devoted to issues of strategy, growth, governance
and risk management. The committee will review
central bank regulatory guidelines on bank
ownership, ownership concentration and
representation on the board, analyse the
representation to see whether the boards have
the appropriate mix of capabilities and necessary
independence to govern the institution, and
investigate possible conflicts of interest in board
representation, including among owner
representatives and regulators. The Committee
will also assess and review the fit and proper
criteria for all categories of directors of banks,
including tenor of directorship, board
compensation guidelines and any other issue
relevant to the functioning of the boards and the
governance they exercise. The Committee will be
headed by P.J. Nayak, former Chairman and CEO
of Axis Bank.

19. CBDT clarifies on TDS on service tax: Tax need
not be deducted at source on the service tax
component on payments made/due to a resident
payee. This will be allowed only in cases where
the service tax component comprised in the
amount payable to a resident is indicated
separately in the contract between the payer and
the payee. In such situation, tax has to be
deducted on the amount paid/payable without
including the service tax component.
20. India-EU free trade pact likely by early 2015:
The European Union is Indias biggest trading
partner.
21. Merchanting eligible for short-term credit: As
per RBI, short-term credit either by way of
suppliers credit or buyers credit will be
available for intermediary trade transactions or
merchanting. Merchanting or intermediary trade
transaction involves purchase of goods by Indian
residents from non-residents and then reselling
them to another non-resident directly without
the goods touching Indian ports. The
merchanting transactions will include the
discounting of export leg Letter of Credit by a
bank authorised to deal in foreign exchange, as in
the case of import transactions.
22. Dip in food prices eases inflation to 5-month
low at 6.16% in December: Prices of food
articles fell 6.4 per cent month-on-month, while
primary articles were down 5 per cent.
23. CAD to be around $50 b: According to Finance
Minister P. Chidambaram, the current account
deficit (CAD) for 2013-14 should be around $50
billion, down from nearly $88 billion in the
previous year.
24. Govt grants CBI more financial autonomy: The
Centre has told the Supreme Court that the CBIs
Director will be given the rank of a Government
Secretary with more financial autonomy. The CBI


Director could now approve projects worth Rs 15
crore in a year. The Director will be given a free
hand to appoint consultants and employ people
on contract in the investigating agency.
25. NCDEX launches gold contract for hedgers:
The National Commodity Derivatives Exchange
has launched gold-hedge contract which will
mimic the international prices without
considering other charges such as customs duty,
local taxes and premiums. Excluding other
charges will make the contract value lesser,
compared with the conventional gold contracts,
thus leading to lower margin requirement and in
effect help to increase market participation.

26. RBI tightens norms to reduce banks exposure
to un-hedged foreign currency: RBI has
decided to introduce incremental provisioning
and capital requirements for banks exposures to
entities with unhedged foreign currency
exposures from April 1, 2014. Unhedged foreign
currency exposures (UFCEs) of corporates are an
area of concern not only for individual
corporates but also for the entire financial
system.
27. Employees Provident Fund to fetch 8.75%:
Central Board of Trustees (CBT) of the
Employees Provident Fund Organisation (EPFO)
have recommended to the Government 8.75 per
cent rate of interest for 2013-14 to its
subscribers as against 8.5% last year.
28. Aadhaar enrolment to cover 60 crore citizens
soon: The Unique Identification Authority of
India (UIDAI) has said that it would complete
issuing 60 crore Aadhaar numbers in the next
three-four months, from 55 crore at present.
29. Rough ride ahead for insurance Web portals:
Web aggregators, that is, Web sites that compile
and provide information on policies of various
insurers, will have to face tighter regulatory
norms. The new regulations rolled out by the
Authority do not allow these aggregators to
display information pertaining to other product
categories, such as loans, deposits and mutual
funds (which are revenue-generators at present),
or display advertisements or tie-ups with social-
media sites. In a bid to ensure that they display
only factual information, the regulator has
disallowed Web portals from showing ratings,
rankings, endorsements or listing of bestsellers.
The IRDA has also introduced a foreign direct
investment limit at 26 per cent for ownership of
Web aggregators.
30. SBI to outsource operations of some ATMs:
The State Bank of India (SBI) has plans to
outsource the management of some of its ATMs.
It has called for a Request for Proposal (RFP)
from vendors to manage about 7,843 cash
dispensers (ATMs). SBI had 32,777 ATMs as at
end-September 2013. It has expanded its
network steadily in the past few years, adding
about a third of its network (about 11,000 ATMs)
in the past 18 months.
31. Piped gas, CNG likely to cost more from April:
The prices of piped cooking gas, transportation
fuel CNG, and electricity generated from gas
could go up, as the Government is set to
announce the new price for domestically
produced gas in March. The Government on
January 10 had notified the new gas pricing
policy that would be applicable to all
domestically produced natural gas from April 1
for the next five years. The price could range
between $7 and $8 a unit which would almost be
double the current rates. Every dollar increase in
natural gas price results in a hike of about Rs
2.60 a unit for piped natural gas, Rs 3 a unit for
CNG, and 50 paise a unit increase for electricity at
the retail end. Piped natural gas is measured in
standard cubic metre and CNG in kg.
32. NELP X will offer uniform licence for all
resources: Lifting all restrictions, the Ministry of
Petroleum & Natural Gas, in the 10th edition of
the oil and gas blocks auction, has proposed to
allow explorers to hunt for all kinds of resources
oil, gas, coal bed methane, or shale. Till now
the country has been offering exploration blocks
under specific policies: New Exploration
Licensing Policy (NELP) for oil and gas, and CBM
Policy for coal bed methane.
33. Bank staff can claim benefits even on removal
from service: The Supreme Court has ruled that
a bank employee can claim pension and
encashment of leave even when removed from
service. The case pertained to the denial of the
claims of late S.K. Kool who was removed from
service as a measure of punishment by Bank of
Baroda.
34. Work on DTC, GST completed: As per
Parthasarathi Shome, Adviser to the Union
Finance Minister, the Union Finance Ministry has
completed the nitty-gritty on both the Direct
Taxes Code (DTC) and the Goods and Services
Tax (GST). For GST to be implemented, further
clearance from the States is also required.
35. Dec export growth slows to 3.5%: Indias
exports grew at a sluggish 3.5 per cent to $26.34
billion in December 2013 compared to the


corresponding year-ago period. Despite the low
export growth, the trade deficit stayed on leash
dropping to $62.77 billion in December 2013
compared with $96.14 billion in December 2012.
This was largely because of the continued fall in
gold and silver imports, which declined by 68.3
per cent to $1.7 billion after various restrictions
were put in place. Overall, imports during the
month declined by 15.25 per cent to $36.48
billion.
36. Govt notifies new gas price mechanism: The
Government has notified the new gas pricing
policy that would be applicable to all
domestically produced natural gas from April 1
for the next five years. However, Reliance
Industries and its foreign partners BP and Niko
Resources in the KG-D6 block would have to
submit a bank guarantee before they can avail
themselves of the new price. The new gas pricing
mechanism, as suggested by a panel headed by
Prime Ministers Economic Advisory Council
Chief C. Rangarajan, has been approved by the
Cabinet Committee on Economic Affairs (CCEA).
37. Bank accounts for all can be achieved through
Aadhaar: According to Nachiket Mor, Chairman
of the RBI-appointed financial inclusion
committee, bank accounts for all can be achieved
in two years if banks can ride on the Aadhaar
enrolment drive that is currently underway. The
Mor committee, has proposed that banks should
provide every individual over 18 years a bank
account by January 2016. In India, only 36 per
cent adults have bank accounts.
38. LIC launches new Jeevan Anand plan: LIC has
re-launched its Jeevan Anand plan, a
participating non-linked plan which offers an
attractive combination of protection and savings.
This product provides financial protection
against death throughout the lifetime of the
policyholder with a special feature wherein it
offers cover for whole life even after payment of
maturity amount.
39. Pre-paid instrument providers can be turned
into banks: According to Nachiket Mor,
Chairman of the RBI-appointed financial
inclusion committee, payment banks can be
created by converting the existing pre-paid
instrument (PPI) providers into banks. The
committee had recommended setting up of
specialised payment banks to provide payment
services and deposit products to small
businesses and low-income households. There
are 27 such PPIs in the country.
40. To protect lenders, mortgage registry to cover
more assets: Banks and lending institutions may
soon be required to file with a central registry all
information on loans sanctioned for gold
jewellery, plant and machinery, corporate brands
and logos. A legal working group set up by
CERSAI and International Finance Corporation,
under the chairmanship of M. R. Umarji, Chief
Legal Advisor, Indian Banks Association, has
recommended that the scope of CERSAI be
expanded to cover movable assets, tangibles and
intangibles. CERSAI (Central Registry of
Securitisation Asset Reconstruction and Security
Interest of India), a state-owned entity, currently
operates a central registry with which
information on all equitable mortgages is filed by
lending institutions. This legal working group has
also recommended to the Finance Ministry that
the scope of CERSAI be expanded to cover all
kinds of mortgage transactions. CERSAI was
established with the main objective of protecting
the lenders against frauds/misrepresentations
and preventing multiple financing against the
same asset (immovable property in the current
scenario).
41. Govt confident of meeting export target of
$325 billion: The Commerce Ministry is
confident of meeting the export target of $325
billion this fiscal with most sectors, except some
such as pharmaceuticals and gems & jewellery,
doing well.
42. Crisil sees loss of 14 million jobs in non-farm
sector over next 6 years: About 12 million
people will return to work in farms or related
activities in the period between FY 2013-19 as
non-farm jobs will likely vanish in thin air due to
slow economic growth and policy paralysis,
according to ratings agency Crisil. If the
projections come true, this will mark the reversal
of a trend seen in the previous seven-year period
between FY 2005-12 that saw a loss of 37 million
farm-related jobs.

43. Offshore wind energy agency on cards: The
Ministry of New and Renewable Energy (MNRE)
is making efforts to set up a National Offshore
Wind Energy Agency to explore wind generation
potential in the offshore areas.
44. Govt to clearly define direct sellers for FDI:
The Government is working on a clear definition
for multi-layer marketing and direct selling in the
foreign direct investment (FDI) policy to remove
ambiguities on the legal status of foreign
companies operating in the sector. The direct
selling industry in India is valued at Rs 7,000
crore and is growing at over 10 per cent per


annum. In multi-layered direct selling, the
company distributors sponsor new sellers who,
in turn, bring in more suppliers. Sales credits are
earned on the basis of products sold by the main
distributors and their sponsored vendors. Since
the FDI policy is silent on multi-layered
marketing and direct selling, such companies run
the risk of being clubbed with fraudulent ponzi
and pyramid schemes and getting penalised
under the Prize Chit and Money Circulation Act,
1978.
45. Aditya Birla group is top corporate donor to
Cong, BJP: According to Association of
Democratic Reforms (ADR), business houses
were the biggest donors to political parties,
accounting for 87 per cent of their total
contribution from known sources. Over the last
eight years, business houses donated Rs 379
crore to political parties. The donations were
made by companies across sectors, including
manufacturing, power, oil, mining and real estate.
46. Soon, bank customers will get live video
assistance: Some banks like Union Bank of India,
Bank of Baroda, Andhra Bank are preparing to
introduce interactive televisions which will guide
customers and help resolve their issues. These
will be connected live to a central studio, where
bank personnel will be available round-the-clock
to interact with customers.
47. SEBI notifies norms for portfolio investors:
The Foreign Portfolio Investor (FPI) Regulations
formed on the recommendations of the K.M.
Chandrasekhar Committee on rationalising
investment routes and monitoring foreign
portfolio investments has been notified. The
regulations merge foreign institutional investors,
sub-accounts and qualified foreign investors into
a single investor class called FPI. SEBI has
decided to do away with prior direct registration
of FIIs and sub-accounts. This would be done by
designated depository participants authorised by
the regulator and would be subject to know-
your-client compliance. FPIs have been divided
into three categories. They would receive the
same tax treatment as FIIs. FIIs and QFIs that are
already registered would be deemed to be FPIs
until their registration expires. FIIs are allowed
to buy and sell securities on payment of
conversion fees till either the their FII/sub
account registration expires or a certificate of
registration as FPI is obtained. However, QFIs
have been given one year to re-register as FPIs.
48. 100% FDI in pharma stays: India will continue
to allow 100 per cent Foreign Direct Investment
(FDI) in existing pharmaceutical companies.
Domestic companies selling their facilities or
operations to foreign players, however, will not
be barred from starting a fresh venture in the
same area as the non-compete clause will not
apply in deals except in special cases. The DIPP
had sought reduction of FDI limit for brownfield
pharma projects from 100 per cent to 49 per cent
in critical areas as it feared that acquisition of
Indian companies could vitally affect availability
and affordability of generic (off-patent)
medicines.
49. IRDA chief bats for single product for all
insurance needs: According to T.S. Vijayan,
Chairman, Insurance Regulatory and
Development Authority, a single product
covering all basic needs of insurance will help
increase the reach of insurance.
50. Health cover, pension plans to drive growth
in insurance sector: According to an Assocham-
Ernst and Young Report, Health insurance and
pension plans will drive growth in the Indian
insurance industry. However, the distribution
and claim management would continue to be
major challenges.
51. Court order puts spoke in banks loan
recovery process in non-metros: As per
Section 14 of the Sarfaesi Act, where the
possession of any secured assets is required to be
taken by the secured creditor the secured
creditor may, for the purpose of taking
possession or control of any such secured asset,
request, in writing, the Chief Metropolitan
Magistrate or the District Magistrate within
whose jurisdiction any such secured asset or
other documents relating thereto may be
situated or found, to take possession thereof.
,The Madurai Bench of the Madras High Court
observed that secured creditors in metropolitan
areas could approach either the Chief
Metropolitan Magistrate or District Magistrate
but cannot approach Chief Judicial Magistrate for
relief under the SARFAESI Act.
52. RBI hikes NBFCs gold loan limit to 75% of
value: NBFCs can now give up to 75 per cent, up
from 60 per cent, of the value of the gold
jewellery pledged as loan. In March 2012, the RBI
had directed NBFCs not to give more than 60 per
cent of the value of gold jewellery pledged in
view of the rapid pace of their business growth
and the nature of their business model, which has
inherent concentration risk and is exposed to
adverse movement of gold prices.
53. DIPP seeks stakeholders views on FDI in e-
commerce: The existing policy does not allow
FDI in business-to-consumer (B2C) e-commerce
activities. But 100 per cent FDI is allowed in
business-to-business (B2B) e-commerce and in
the market place model under which the e-


retailer does not sell directly to consumers but
provides a platform to other sellers.
54. Every adult should have bank account by Jan
2016: According to RBI appointed Nachiket Mor
Committee on Comprehensive Financial Services
for Small Businesses and Low-Income
Households, every resident should be issued a
Universal Electronic Bank Account automatically
at the time of receiving their Aadhaar number by
a high quality, national, full-service bank. An
instruction to open the bank account should be
initiated by the Unique Identification Authority of
India upon the issuance of an Aadhaar number to
an individual over the age of 18. By January 1,
2016, the number and distribution of electronic
payment access points would be such that every
resident would be within a 15- minute walking
distance from such a point anywhere in the
country.
55. Create one agency to redress all customer
complaints: The Committee on Financial
Services has suggested that a unified Financial
Redress Agency (FRA) across all financial
products and services should be created by the
Ministry of Finance to solve consumer
complaints within 30 days. The FRA, which will
in turn coordinate with the respective regulator,
should have a presence in every district in the
country and customers should be able to register
complaints over the phone, using text messages,
internet, and with the financial services provider
directly. The provider should then forward the
complaint to the redressal agency and customers
should have their complaints resolved within 30
days of registration of the complaint with the
FRA.
56. Specialised banks for low-income households:
The RBI-appointed committee on financial
inclusion has recommended that the central bank
should set up specialised banks called Payments
Bank to provide payment services and deposit
products to small businesses and low-income
households. Since the new bank will be dealing
with poor customers, such a bank must be
allowed to accept a maximum deposit of not
more than Rs 50,000. Such a bank will earn from
the payment services it offers, such as money
transfers and online payments, as well as by
deploying the deposits in secure government
securities (G-secs). In order to protect the money
of the poor customer, such a bank will not be
allowed to lend in the market.

57. Priority lending targets may be revised based
on sectors, districts: To enable greater regional
and sectoral specialisation among banks, RBI
may revise the priority sector lending (PSL)
targets and require banks to meet an adjusted
PSL target of 50 per cent against the current
requirement of 40 per cent.
58. Set up State finance regulatory panel: The
Committee on Comprehensive Financial Services
for Small Businesses and Low-Income
Households has suggested that a State Finance
Regulatory Commission (SFRC) could be created
into which all the existing State Government-
level regulators could be merged. Functions such
as the regulation of non-government
organisations, microfinance institutions and local
money services business could be added on to
the SFRC.
59. Bank design horizontal & vertical: The
committee on financial inclusion has come up
with two broad designs for the banking system in
the country the Horizontally Differentiated
Banking System (HDBS) and the Vertically
Differentiated Banking System (VDBS). In HDBS
design while all configurations are deposit-
taking, the variations between them are on
account of: (i) the ways in which they originate
risks and transmit them throughout the system;
and (ii) their size and focus whether regional


or sectoral. The HDBS has six design categories
national bank with branches; national bank
with agents; regional bank; national consumer
bank; national-wholesale bank; and national-
infrastructure bank. The rational for VDBS is
usually linked to niche capabilities such as credit
under-writing for specialised business segments
or network management in the case of payments.
The HDBS has five design categories payments
network operator; payments bank; full-service
bank; wholesale consumer bank; and wholesale
investment bank.

60. CAG can audit private telcos: The Delhi High
Court has ruled that the Comptroller and Auditor
General can audit revenues of private companies
if they have an impact on Governments income.
61. Services PMI down for sixth consecutive
month: The HSBC PMI Index shrank to 46.7 in
December from 47.2 in November. A reading
above 50 indicates growth while anything below
50 denotes a contraction.
62. FinMin to re-examine capital controls, foreign
portfolio investment norms: The Ministry has
extended the term of the Sahoo Committee,
which recently submitted its recommendations
on depository receipts. In the second phase, the
nine-member panel headed by M. S. Sahoo, has
been asked to review the framework on external
commercial borrowings (ECBs) and foreign
currency convertible bonds (FCCBs). Besides
reviewing the framework of direct listing of
Indian companies abroad, the panel will look at
dual listing of corporates.
63. Banks approach RBI to hike ATM transaction
fee: Banks have mooted the charge on ATM
transactions to pay for the increased security
costs at ATMs, put in place by many State
Governments, following the grievous attack on a
woman inside an ATM kiosk in Bangalore last
November. Currently, there is no cap on the
number of transactions that a customer can
undertake at his own banks ATM. Given that the
country has about 1.40 lakh ATMs at present,
banks will roughly see an outgo of about Rs 560
crore a month on account of providing security
alone.
64. Company Law Tribunal: The Corporate Affairs
Ministry has invited applications for filling up
two posts of technical member in the National
Company Law Appellate Tribunal (NCLAT).
Under the new company law, NCLAT will hear
appeals against the orders of the National
Company Law Tribunal, an overarching body
being set up for implementation of company law
in India.
65. Early warning system to help SBI zero in on
stressed loans: Faced with a pile of bad loans,
State Bank of India plans to set up an early-
warning system to identify signs of stress in such
loans so that it can act immediately to resolve
them. The move comes in the wake of the banks
gross non-performing assets increasing by about
40 per cent to Rs 64,206 crore at the end of
September 2013 against Rs 49,202 crore at the
end of September 2012.
66. SEBI names 3 qualified clearing houses for
securities market: The capital market regulator
SEBI has said that National Securities Clearing
Corporation Ltd (NSCCL), Indian Clearing
Corporation Ltd (ICCL) and MCX-SX Clearing
Corporation Ltd (MCX-SXCCL) are the only
qualified central counterparties (QCCPs) in the
Indian securities market. Clearing Corporations
are designated as Market Infrastructure
Institutions for oversight considering its systemic
importance in securities markets regulated by
the SEBI. They are also subject to rules and
regulations that are based on International
Organisation of Securities Commissions (IOSCO)
Principles for Financial Market Infrastructures
(PFMIs). These principles were issued by IOSCO
in April 2012 to enhance the safety and efficiency
in payment, clearing, etc.

67. Despite legal challenges, Govt moves ahead
on Company Law Tribunal: The Government is
moving ahead with the formation of the National
Company Law Tribunal (NCLT), an overarching
body being set up for implementing most
provisions of the new company law, even as the
outcome of a petition filed before the Supreme
Court by the Madras Bar Association is awaited.
68. RBI panel enlists 2 administrators for setting
financial benchmarks: According to an RBI
committee, the Fixed Income Money Market and
Derivatives Association of India (FIMMDA) and
the Foreign Exchange Dealers Association of
India (FEDAI) may be designated as
administrators for all rupee interest rate and
foreign exchange benchmarks, respectively.
FIMMDA is a voluntary market body for the bond,
money and derivatives markets. FEDAI is a self-
regulatory body, whose major activities include


framing of rules governing the conduct of inter-
bank foreign exchange business and liaison with
the RBI for reforms and development of the forex
market. Financial benchmarks are primarily used
for pricing, valuation and settlement purposes in
financial contracts.
69. To boost supply, Govt relaxes norms for mega
power projects: The Government has decided to
ease the Mega Power Policy in a move that will
help nearly 25 projects with investments of more
than Rs 1.6 lakh crore. This is expected to
increase power availability in the country and
also ensure that consumers are charged
reasonably for electricity supply. The
amendment allows project developers to tie up
for only 65 per cent of generation capacity
through competitive bidding with the State
distribution utilities against the earlier norm of
85 per cent. The amendment allows the
developer to sell up to 35 per cent of
installed/net capacity under regulated tariff as
per the specific host State policy.
70. In FY13, export markets remain almost same:
According to statistics put out by RBI, the
destination of Indias exports during the first half
of the current fiscal remained broadly the same
as the previous year. India exported goods worth
$300 billion in fiscal 2013. In the first six months
of the current fiscal, exports have nearly touched
$152 billion. About a third of the exports goes to
OECD countries, which include the European
Union, North America (US/Canada), Australia
and Japan. About a fifth of the exports goes to
OPEC countries (Indonesia, Iran, Iraq, Kuwait, the
UAE and Saudi Arabia). Forty-three per cent of
the exports were sent to other developing
countries (such as those in the SAARC region,
other parts of Asia and Africa) in the first six
months ending September 2013.
71. Inflation, job creation are the challenges for
Govt: According to PM, there are three main
challenges on economic front creating jobs in
the manufacturing sector, controlling the
persistent inflation, and curbing corruption.
72. Cabinet nod for conversion of pref shares into
equity in 3 banks: The Union Cabinet has given
its nod for conversion of perpetual non-
cumulative preference shares held by the
Government in three public sector banks
Indian Bank, UCO Bank and Vijaya Bank into
equity shares. PNCPS amounting to Rs 400 crore,
Rs 1,823 crore and Rs 1,200 crore in Indian Bank,
UCO Bank and Vijaya Bank, respectively, will be
converted into equity in favour of Central
Government.
73. Government cancels Rs 3,500-cr chopper deal
with AgustaWestland: The Government has
scrapped the controversial Rs 3,500-crore deal to
purchase 12 helicopters from AgustaWestland.
The deal was cancelled following allegations of
unethical dealings by Italian company
Finmeccanica in the sale by its Anglo-Italian
subsidiary AgustaWestland to the Ministry of
Defence. It is alleged that kickbacks were paid to
win the contract.

74. RBI seeks taxmans feedback on bank licence
aspirants: RBI has asked the income-tax
authorities information on six issues related to
tax compliance of the 25 groups that have
applied for starting a bank. The issues include
whether the groups were subjected to any search
and seizure/survey in the past five years;
whether any penalty was imposed for
concealment of particulars/furnishing
inadequate particulars of income; whether the
entities are facing any prosecution proceedings
under the Income-Tax Act and/or whether they
were convicted for any offence under the Act;
whether the entities have filed their returns up-
to-date; whether any tax dues are outstanding;
and whether the entities are complying with the
provisions relating to deduction of tax at source.
75. Service tax on insurance takes effect: From 1
st

January 2014, the services related to insurance
like third-party administrators (TPAs), brokers,
agents, insurance repositories, Web aggregators,
referral entities and surveyors will be subject to
service tax.
76. Farm, industrial sectors account for most of
the bad loans: As per RBIs Financial Stability
Report, gross non-performing assets (NPAs) are
likely to go up to 4.6 per cent of total loans by
September 2014 from 4.24 per cent this
September from Rs 1.67-lakh crore to Rs 2.29-
lakh crore. In terms of gross NPAs, agriculture
has the highest ratio at 5.5 per cent at end-
September 2013. The sector is followed by
industries at 4.9 per cent. Share of retail loans in
gross NPAs stood at 2.2 per cent, while
restructured standard advances to total advances
were 0.3 per cent at end-September. Public
sector banks have the lowest share of the retail
segment in their loans portfolio around 16%.
77. Cabinet okays setting of 58 medical colleges:
The Cabinet Committee on Economic Affairs
(CCEA) has approved the establishment of 58
new medical colleges which will be attached with
the existing district or referral hospitals.


MAR 2014

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

3. IRDA eases norms to reduce agent attrition:
The Insurance Regulatory and Development
Authority (IRDA) has decided to remove
minimum persistency criteria (the minimum
number of policies sold by agents that have to be
renewed), leaving it to the board of each life
insurer to have their own norms on persistency.
In 2011, the IRDA had put in place a minimum
persistency rate of at least 50 per cent. Last year
the IRDA had also waived off the condition of
fresh training for agents whose licences had
lapsed. Further, in a bid to attract more agents
into the life insurance industry, the regulator
reduced the cut-off percentage in the pre-
recruitment examination from 50 per cent to 35
per cent.
4. Tiny deposit collectors get a minimum wage
hike: The Tribunal has ruled that on a monthly
collection of Rs. 3 lakh, a deposit collector should
get fallback wages of Rs. 8,000 and conveyance of
Rs. 750 a month. On a monthly collection of over
Rs. 3 lakh and up to Rs. 5 lakh, a deposit collector
will earn an incentive of 3 per cent. For a monthly
collection of over Rs. 5 lakh, a deposit collector
will earn an incentive of 2 per cent. The award
will be applicable retrospectively from July 19,
2005, the date when the banks were summoned
to appear before the Tribunal. Currently, a
deposit collector / agent gets fallback wages of
Rs. 750 on a collection of Rs. 7,500 per month.
For collections above Rs. 7,500/month, they get
an incentive of 2 per cent of the amount
collected. In case a deposit collector mops up Rs.
3 lakh per month, he can take home only Rs.
6,600 ( Rs. 750 as fallback wages plus Rs. 5,850
as incentive remuneration).
5. Axis Bank rolls out e-KYC account opening
service: The customer can approach the banks
business correspondents, who will access the
MicroATM (a biometric handheld device) to open
an Aadhaar-based account through e-KYC (know-
your-customer). For the Aadhaar-based e-KYC
mode of account opening, Axis Bank has tied up
with the National Payments Corporation of India
and the Unique Identification Authority of India.
6. Third party motor insurance rates likely to be
market driven by year-end: The rates are likely
to go up from April this year, consequent to an
IRDA proposal for rate hikes of between 25 per
cent and 137 per cent. Currently, third party
motor insurance is the only segment where
premium rates are fixed by the insurance
regulator. Third party liability premium rates
have been going up for the last two years.
7. Lending rate for fresh loans rise faster than
for existing ones: According to RBIs quarterly
data on WALR, the weighted average lending rate
(WALR) for fresh loans rose 57 basis points from
11.46 per cent (in the April-June period) to 12.03
per cent (in the July-September period). The
WALR for existing loans nudged up 11 basis
points from 12.20 per cent to 12.31 per cent.
8. Rs. 3,000-cr PF deposits lying unclaimed: As
per the CAG report, 8.53 per cent of the total of
8.55-crore accounts were inoperative as on
March 2012. The number of such accounts
zoomed to over 73 lakh in 2011-12 from over 25
lakh in 2006-07.


9. United Bank of India chief quits as bad-loan
crisis boils over: Archana Bhargava, CMD of
United Bank of India (UBI), opted for voluntary
retirement with effect from February 20.
Bhargavas resignation comes in the wake of a
surge in bad loans at UBI, leading to a loss of
around Rs. 1,200 crore in the third quarter. UBIs
gross non-performing assets (NPAs) jumped to
Rs. 8,546 crore in the October-December quarter
(including a fresh slippage of Rs. 3,172 crore).
As of December 31, 2013, UBIs gross NPAs stood
at 10.82 per cent of total advances, one of the
highest among Indian banks.

10. I-T Dept shoots letters to 50,000 non-filers:
The Finance Ministry has stated that it has
identified 21.75 lakh people for not filing income
tax returns and letters have been sent to 50,000
individuals. The Income-Tax Department
identified these non filers on the basis of a
business intelligence project. This identifies
Permanent Account Number (PAN) holders who
have not filed income tax returns and about
whom specific information is available in Annual
Information Return (AIR), Central Information
Branch (CIB) data and TDS (Tax Deducted at
Source) or TCS (Tax Collected at Source) returns.
11. Fertiliser subsidy may touch Rs. 90,000 cr in
2014-15: Fertiliser subsidy is estimated to rise
to Rs. 90,000 crore for the 2014-15 fiscal. This is
30 per cent more than the estimate made in the
interim budget. The estimate is based on the
carry-over from the current fiscal and new
demand for subsidy.
12. Banks as brokers: Life Insurance Council has
no firm view: The Life Insurance Council is an
apex industry/consultative body representing 24
life insurers in the country. The Ministry of
Finance has asked public sector banks to take up
compulsory insurance brokerage from January
15, 2014, which has however, been kept in
abeyance. As a corporate agent, a bank is allowed
to sell products of a single life insurance
company. But as a broker, it can sell multiple
policies of different insurers.
13. RBI panel to examine recommendations on
financial sector reforms: RBI has decided to
constitute a committee to examine the
recommendations of the Financial Sector
Legislative Reforms Commission (FSLRC)
relating to capacity building in the banking
sector. It will examine if the members on bank
boards need to be certified by way of say, an
appropriately designed course which could be
made mandatory for every individual before
appointment to the board of a bank. The
committee, which is headed by G Gopalakrishna,
Executive Director, Reserve Bank of India, has
been tasked with the responsibility of identifying
capacity building requirements keeping in view
the role of financial sector and what it should
deliver.
14. Weakening bank balance-sheets is a worry:
The International Monetary Fund (IMF) has
cautioned Indian authorities to closely monitor
the deteriorating corporate financial position and
weakening bank balance sheets of banks,
especially public sector banks. There is need to
strengthen prudential regulations of banks asset
quality classification and concentration risks.
15. State Bank of India to go slow on hiring: The
countrys largest lender, which used to hire
30,000-35,000 employees annually till a few
years ago, has slowed down fresh recruitments
since last year amid rising staff expenses and
other concerns.
16. Indian banks abroad see credit growth rise
31.7%: According to Reserve Bank of Indias
survey on international trade in banking services,
Indian banks operating overseas witnessed
higher credit growth compared to their foreign
counterparts operating in India. According to the
survey for 2012-13, growth of credit extended by
Indian banks branches operating abroad
increased by 31.7 per cent to Rs. 5,85,570 crore
($ 107.7 billion). Credit extended by foreign
banks operating in India increased 27.5 per cent
to Rs. 3,07,700 crore billion ($56.6 billion)
during 2012-13. Deposits mobilised by Indian
bank branches operating abroad increased 45.5
per cent to Rs. 3,93,070 crore ($72.3 billion)
during 2012-13. In case of foreign banks
operating in India, deposit growth moderated to
3.2 per cent at Rs. 2,83,510 crore.
17. Govt to take back coal blocks allotted to 50
companies: According to the Government,
blocks that were not able to achieve the requisite
milestones have been de-allocated.
18. Parliament passes Telangana Bill: Both Lok
Sabha and Rajya Sabha have passed Andhra
Pradesh Reorganisation Bill, 2014, to create a
separate Telangana State.
19. Rice exempted from service tax: Rice was
originally exempted from service tax as it was
classified as agriculture produce. However, the
Finance Ministry later said that only paddy was
agriculture produce, while rice was a processed
item. By virtue of the definition of agricultural
produce in Finance Act 2012, read with the


Negative List, storage or warehousing of paddy
was excluded from the levy of service tax. Rice
was not. Budget 2014-15 has proposed to exempt
loading, unloading, packing, storage and
warehousing of rice from service tax.
20. Banks can continue as agents of insurers:
Authority (IRDA) is renewing the corporate
agency licences of banks having tie-ups with
insurers. At present, banks have a corporate
agency arrangement with insurance companies
to sell insurance products. Under this
arrangement, they are allowed to sell products
exclusively of one life insurer, one non-life
insurer and a standalone health insurer. IRDA
has not yet set a deadline on when banks should
become insurance brokers. In December, the
Finance Ministry issued a notification asking
banks to become insurance brokers, whereby
they will sell policies of multiple insurers. This
move is aimed at creating a level-playing field for
non-bank promoted insurance companies vis--
vis bank-promoted insurance companies. Major
public sector and private sector bankshave
promoted insurance companies. Most of these
banks are not keen to become insurance brokers
as they have contractual obligations with joint
venture partners of insurance companies.
21. Inflation tumbles to 8-month low of 5.05% in
Jan: Led by softening food prices, inflation as
measured by the Wholesale Price Index (WPI)
cooled to an eight-month low of 5.05 per cent in
January. The WPI inflation in January is the
lowest since May 2013 and significantly lower
than the 7.31 per cent figure in January 2013.
This moderation comes on the heels of Consumer
Price Index (CPI) inflation hitting a two-year low
of 8.79 per cent in January. There was, however,
no respite on the core inflation front, with the
rate inching up to 3 per cent in January from 2.8
per cent in December 2013.
22. SBI tweaks recovery model: With bad loans
surging 27 per cent year-on-year to touch Rs.
67,799 crore towards the end of December, State
Bank of India has got into a non-performing
asset control mode, tweaking its recovery model
and setting up committees to check further
slippages.
23. Govt rakes in Rs. 61,162 cr in spectrum sale:
The spectrum auction, which ended after 10 days
of intense bidding, has thrown up Vodafone,
Airtel and Reliance Jio as clear winners giving
these operators spectrum that can be used for
high-end data services using 3G and 4G
technologies.
24. Regulator sets seven-board cap for
independent directors: In a move to promote
good business practices, the SEBI board has
approved new corporate governance norms that
restrict the number of independent directors on
a company board, spell out whistleblower
policies, and institute checks on salaries of key
managerial persons, among other things. The
board has now revised its listing agreement,
bringing it in line with the requirement of the
provisions of the Companies Act, 2013. The new
norms will come into effect from October 1.
Under the new rules, an individual can serve as
an independent director on a maximum of seven
listed companies. The Board also decided that if
an individual is a whole-time director in a listed
company, he can serve as an independent
director in a maximum of three companies. Also,
if one has completed five years or more as an
independent director, he will be eligible for just
one more term of five years. Managerial
remuneration will be decided by a compensation
committee headed by an independent director.

25. Moderation in farm support prices will help
ease inflation: Moderation in agricultural
support price will ensure that these prices only
provide a baseline level of support when the
farmer is in difficulty, without displacing market
prices. Raising energy prices to market levels will
also lead to lower inflation over the medium
term, the horizon over which the RBI is trying to
contain inflation. The reason is that higher prices
will reduce excessive consumption, reduce
subsidies and fiscal deficits, and incentivise
investment and competition, even while allowing
prices to be determined by an increasingly stable
and plentifully supplied global market for energy.
26. IIP contracts 0.6%; retail inflation eases to 2-
year low in Jan: Growth in industrial production
remained negative for the third month in a row,
contracting 0.6 per cent in December 2013,
mainly due to the sluggish performance of the
manufacturing sector. However, retail inflation
for January 2014, eased to a two-year low of 8.79
per cent as against 9.87 per cent in the previous
month.
27. Bitcoins are still under the lens: RBI Governor
Raghuram Rajan has said the central bank is
currently trying to understand virtual currencies
and will come out with a more considered view
on it. In December, the RBI had cautioned users,
holders and traders of virtual currencies about
potential financial, operational, legal and


security-related risks they are exposing
themselves to. The Government has said creation,
trading or usage of virtual currencies as a
medium of payment are not authorised by any
central bank or monetary authority.
28. Trade deficit halves in January on fall in gold,
silver imports: Indias trade deficit fell by half to
$9.92 billion in January from $18.87 billion in the
corresponding month last year, with the
Government succeeding in cutting down gold and
silver imports through higher import duties and
other curbs. Total imports fell 18.07 per cent
year-on-year to $36.57 billion due to a 77 per
cent drop in gold and silver imports, while
exports increased a modest 3.79 per cent to
$26.75 billion over the corresponding month last
year. A low trade deficit is necessary to contain
the current account deficit, and this in turn helps
to maintain a healthy balance of payments. A high
current account deficit, on the other hand,
weakens the domestic currency and keeps away
foreign investors.
29. Marked drop in complaints against direct
selling and recovery agents: According to the
annual report on the Bank Ombudsman scheme,
prepared by the Reserve Bank of India
complaints against direct selling agents and
recovery agents declined to 351 at the end of
2012-13 against 1,722 at the end of 2010-11.
30. Maruti 800 production stopped: The countrys
largest carmaker Maruti Suzuki has stopped
production of its nearly three-decade-old popular
car Maruti 800 with effect from January 18. The
small car was being sold in non-metros in the last
two years. But with the stoppage of production, it
will now no longer be available to the public.
31. Sugar industry calls for changes to bank loan
scheme: The Indian sugar industry has urged the
Government to ease or remove key conditions of
the proposed bank loan scheme to clear the dues
to cane farmers. In December last year, the
Cabinet Committee on Economic Affairs had
approved Rs. 6,600-crore interest-free loan to
the sugar industry and announced that the 12 per
cent interest subvention would be borne by the
Government.

32. Rs. 10 plastic note to be tried out in five cities:
About 1billion Rs. 10 plastic notes will be
introduced on a trial basis in five cities Kochi,
Mysore, Jaipur, Shimla and Bhubaneswar. The
field trial is expected to be launched in the
second half of 2014.

33. 4 more States identified for Aadhaar
enrolment: Aadhaar enrolment in four States
Uttar Pradesh, Bihar, Chhattisgarh and
Uttarakhand will be carried out in addition to
enrolment by the Registrar General of India
(RGI). As of now, over 57-crore Aadhaar numbers
have been generated, facilitating the roll-out of
the Direct Benefits Transfer (DBT) scheme in
select districts. At present, the DBT scheme
covers 28 Centrally-sponsored schemes in 121
districts.
34. Justice Mathur to head 7th Central Pay panel:
The Government has approved the composition
of the Seventh Central Pay Commission. The
Commission will be headed by former Supreme
Court Judge Ashok Kumar Mathur. The
Commission has been mandated to submit its
report in two years time and its
recommendations would be implemented from
January 1, 2016.
35. RBI releases Report of the Committee on
Financial Benchmarks: The Committee was
headed by Shri P. Vijaya Bhaskar, Executive
Director, RBI to study various issues relating to
financial benchmarks in India.


36. Report on Enabling PKI in Payment System
Applications: RBI has released, the Report of the
Technical Committee on Enabling Public Key
Infrastructure (PKI) in Payment System
Applications.
37. Committee to examine FSLRC
Recommendations: RBI has constituted a
Committee headed by Shri G. Gopalakrishna,
Executive Director, Reserve Bank of India to
examine issues relating to Capacity Building in
Banking Sector as suggested by the Report of the
Financial Sector Legislative Reforms Commission
(FSLRC).
38. Report of the Technical Committee on Mobile
Banking: RBI has released the "Report of the
Technical Committee on Mobile Banking" which
was headed by Shri B. Sambamurthy, Director,
Institute for Development and Research in
Banking Technology, to examine the
options/alternatives including the feasibility of
using encrypted SMS based funds transfer using
an application that can run on any type of
handset for expansion of mobile banking in the
country.

WISH YOU GOOD LUCK FOR UPCOMING
SBI PO 2014 EXAM
- Team BANKERSADDA & CAREER POWER

Financial Awareness Capsule Sbi Po

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