Banking and Financial Awareness – 88

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Banking and Financial Awareness 88

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Financial Awareness 88

Editorial Team

17 Apr, 2015

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Banking Awareness,

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1) India Post, the postal department of Govt. of India, on 1 April 2015

closed its 135-year old Money Order (MO) service. The Money Order

service, which provided pan-India door-delivery of funds to a payee from

over 155,000 post offices, was an integral part of the department since

1880. India Post is now focusing on which 2 postal remittance services?

Electronic Money Order (eMO) and Instant Money Order (iMO)

Explanation: The legendary MO service was the traditional money

transfer service of India Post and end of its service did evoke a sense of

nostalgia for numerous Indians who grew upon being part of this service.

However, in the era of instant communications the MO service made way for its electronic versions eMO and iMO.

Both these are much faster and simpler means to remit money. Under eMO service money is paid at the door-step of a

payee from Rs.1 to Rs.5,000 within a day, along with 21 standard messages. It is booked at an authorised post

office and delivered pan-India from all delivery post offices. This can also be tracked on the India Post website. The

iMO system provides instant money order service for amounts ranging from Rs.1,000 to Rs. 50,000. An instant, web-

based system, money can be remitted by designated iMO post offices where an electronic version of a form is filled

along with an identity proof.

2) Which entity became the first public sector undertaking (PSU) to hit the market in fiscal year 2015-16 with its

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disinvestment taking place on 8 April 2015? Rural Electrification Corporation (REC)

Explanation: Union Govt. sold 5% of its stake in REC on 8 April at Rs. 315 a share to mop up over Rs. 1,550 crore,

marking the first PSU disinvestment of the current fiscal. The price for the offer for sale (OFS) of 4.93 crore REC shares

was decided on 7 April at a meeting headed by Finance Minister Arun Jaitley. The government has budgeted to raise

Rs. 41,000 crore through minority stake sale in 2015-16. The disinvestment department has a pipeline of companies to

sell minority stake to avoid bunching up of disinvestment towards the end of end of the fiscal. The companies which

have been lined up for disinvestment include BHEL, Dredging Corporation, NALCO, IOC and NMDC.

3) RBI presented its first bi-monthly Monetary Policy Review on 7 April 2015 and kept all primary rates, including the

Repo Rate, unchanged. What is the estimated GDP growth rate proposed to be achieved by RBI during fiscal year

2015-16? 7.8%

Explanation: The RBI estimated that the Indian economy would achieve a healthy growth rate of 7.8% during 2015-16,

up from 7.5% in 2014-15. RBI has already reduced the repo rate by 50 basis points (bps) so far this year and hence

restrained itself from further reduction this time. It kept the cash reserve ratio (CRR) or the proportion of deposits banks

have to keep aside with RBI unchanged. Banks were hoping for a cut in CRR to cut interest rates. But in another

important move, the RBI asked banks to pass on the Repo Rate cut benefits to customers and the industry.

Following are the major highlights of RBIs First bi-monthly Monetary Policy Review for 2015-16

- Short-term lending rate (Repo) unchanged at 7.5%

- Cash Reserve Ratio (CRR) unchanged at 4%

- Statutory Liquidity Ratio unchanged at 21.5%

- Consumer Price Index (CPI)-based inflation forecasted at 5.8% by March 2016

4) Union Govt. has planned which step to promote the Kisan Vikas Patra (KVP), which was re-launched during

November 2014? It has roped in Public Sector Banks (PSBs) to sell KVP certificates

Explanation: There-launched Kisan Vikas Patra has failed to garner much interest and collected just Rs 1,100 crore in

2014-15. Gross collections for KVP were as high as Rs 21,631.16 crore in 2010-11, which was the year before it was

discontinued. KVP is presently issued through Post Offices only and the Union Govt. has now decided to sell KVPs

through PSBs also. Finance minister Arun Jaitley had in November 2014 re-launched the KVP, which was a hugely

popular small saving scheme of the 1990s. On the other hand, another small saving scheme launched last year, the

Sukanya Samriddhi Account (SSA), is fast gaining popularity with over 27 lakh accounts already opened under it.

5) The amalgamation scheme of which two private sector banks came into effect on 1 April 2015 after the Reserve

Bank of India (RBI) gave its approval for their merger? Kotak Mahindra Bank and ING Vysya Bank

Explanation: The RBI on 31 March 2015 approved the merger of ING Vysya Bank into Kotak Mahindra Bank. In

November 2014, Kotak Mahindra Bank had announced it was acquiring Bengalaru-headquartered ING Vysya Bank in

an all-stock deal of over Rs. 15,000 crore ($2.4 billion). The merger deal was approved by the Competition

Commission of India (CCI) during February 2015. Following RBIs approval, all the tangible and intangible assets of the

two entities were transferred to Kotak Mahindra Bank to make it the fourth largest private-sector bank in India after

ICICI Bank, HDFC Bank and Axis Bank respectively. The merged entity has now 1,214 branches, with a wide-spread

pan-India network. ING Vysya had around 10,000 employees, while Kotak Mahindra Bank has around 29,000.

6) The State Bank of India (SBI) on 31 March 2015 announced plans to divest 10% stake in its life insurance arm SBI

Life. Which foreign financial entity is the minority partner in SBI Life? BNP Paribas Cardif (France)



Life. Which foreign financial entity is the minority partner in SBI Life? BNP Paribas Cardif (France)

Explanation: SBI Life Insurance is a joint venture between SBI and BNP Paribas Cardif of France. At present, SBI

owns 74% of the total capital and BNP Paribas Cardif has the remaining 26% in the joint venture. There have been

increased efforts to restructure the insurance sector in the country after the Parliament in March 2015 had passed the

Insurance Laws (Amendment) Bill, 2015 which seeks to increase foreign investment in private sector companies to

49% from the existing 26%.

7) The Union Govt. on 1 April 2015 revamped the procedure for appointment of non-official directors (NoDs) on the

Boards of public sector banks, insurance companies and financial institutions. What the new age limit for appointment

of NoDs is, as prescribed in these guidelines? Less than 67 years

Explanation: The revamp in the procedure for appointment of NoDs was done with a view to professionalise the

Boards of these banks and financial institutions and further provide requires skill sets to improve the quality of

deliberations on the Boards. According to the new guidelines, the applicant for the post of NoD must less than 67 years

of age and have 20 years of prescribed professional work experience. NoDs could be appointed for maximum six

years or two terms. Apart from this, a dedicated web portal (http://financialservices.gov.in/nod) was created where

interested persons can apply online.

8) What was Indias external debt stood as on 31 December 2014 according to the data released by the Finance

Ministry on 31 March 2015? $462 billion

Explanation: Indias external debt of $462 billion as of end-December 2014 was thus 3.5% greater than the figure at

the end of March 2014. However, Indias external debt-to-gross domestic product (GDP) ratio stood at 23.2% as of

end-December, thus showing marginal compared with 23.7% as of end-March 2014. The countrys short-term debt fell

6.7% from March-end 2014 to $85.6 billion as of December-end, while long-term debt rose 6.1% to $376.4 billion.

9) What was the total foreign fund inflow into India by foreign institutional investors (FIIs) during 2014-15 that was the

highest annual FII investment in Indian capital markets? Around Rs. 2.7 lakh crore

Explanation: According to the latest data available with Central Depository Services Ltd (CDSL), the Foreign

Institutional Investors (FIIs) made a net equity investment of Rs. 1.09 lakh crore in 2014-15, and a further Rs. 1.64 lakh

crore into debt markets. Thus total FII inflows during 2014-15 stood at Rs. 2.73 lakh crore. This was the highest net

inflow by FIIs since being allowed to invest in Indian capital markets (equity and debt) over two decades ago in

November 1992. The previous high was in 2012-13, when the net investments climbed to Rs. 1.68 lakh crore.

10) The Income Tax Department on 31 March 2015 took which extreme step against big tax defaulters? It published

their names in newspapers

Explanation: The IT Department had, till now limited itself to posting the names of some of its biggest defaulters on its

website. But the department on 31 March adopted the extreme step of publishing the name of the defaulters in reputed

newspapers. This was done so that the common man can come forward to help the department in knowing the

whereabouts of these. The step is to enhance public awareness against these entities who are acting against law. The

newspapers carried the names of the tax defaulters and the data published was quoted to have been published by the

Principal Chief Commissioner of Income Tax (Administration). This is the first time the department has put in public

domain a list of those wilful tax defaulters who have a tax liability of Rs. 10 crore and above.

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Banking and Financial Awareness – 88