1) The Reserve Bank of India (RBI) on 27 November 2014 issued final guidelines for payments and small banks that aim to take banking services to more people and small businesses. What is the prescribed minimum paid-up equity capital for both these categories of banks? – Rs. 100 crore
Explanation: The small bank will primarily undertake basic banking activities of acceptance of deposits and lending to un-served and under-served sections, including small business units, small and marginal farmers, micro and small industries and unorganised sector entities. On the other hand payments banks would help a common person to make payments through an easy mode, to a wide array of institutions/people in a cost effective manner. They are expected to emerge as specialized banks to provide services to small businesses and persons.
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2) The Reserve Bank of India (RBI) presented its 5th Bi-monthly Monetary Policy review for 2014-15 fiscal on 2 December 2014. Despite pressure to cut interest rates from industry as well as some quarters of the government, RBI kept the major rates unchanged as it kept its focus on tackling inflation. What are the major projections and rates coming out of this review?
- GDP growth rate projected at 5.5% for current fiscal
- Consumer Price Index (CPI)-based inflation projected to remain at 6% by March 2015
- Repo rate (short term lending rate) unchanged at 8%
- Cash Reserve Ratio (CRR) unchanged at 4%
- Statutory Liquidity Ratio (used for unlocking banking funds) retained at 22%
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3) The RBI in its 5th Bi-monthly Monetary Policy review for 2014-15 fiscal presented on 2 December 2014, kept the most important repo rate unchanged at 8%. The last time this rate was changed was – January 2014
Explanation: In January 2014 the RBI had increased the repo rate by 25 basis points to 8%. Since then this rate has been unchanged.
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4) Which private-sector bank on 25 November 2014 received approval from the Reserve Bank of India (RBI) to enter the general insurance business? – Kotak Mahindra Bank (KMB)
Explanation: Kotak Mahindra Bank was given the approval to form a 100% subsidiary to enter the general insurance industry. KMB has also floated the new venture with an initial capital of Rs. 100 crore and Executive Vice-President Mahesh Balasubramanium was named the Chief Executive Officer (CEO) of the new venture. Initially, the bank will focus on motor and health insurance and aims to grab about 0.5% of the market share in five years. The industry is expected o grow at a CAGR of 15% to grow to Rs.1.80 lakh crore by 2020 (from Rs. 77,000 crore).
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5) Share of which private sector bank will be split and reduced to face value of Rs. 2 from 4 December 2014, as notified in a notification issued by the NSE and the BSE? – ICICI Bank
Explanation: Face value of ICICI Bank’s equity share is Rs. 10 at present. ICICI Bank has fixed record date as 5 December 2014 for the purpose of ascertaining the eligible shareholders who would be entitled to receive five equity shares of face value of Rs. 2 each in lieu of one equity share of face value of Rs. 10 each of the bank. The stock split is expected to increase investor participation in the stock.
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6) The Reserve Bank of India (RBI) during November 2014 eased rules for low-cost housing loans. What is the new prescribed rule? – Banks can now extend loans to individuals against long-term bonds issued by banks for financing infrastructure and affordable housing
Explanation: This regulation has been imposed primarily to provide liquidity to retail investors investing in such long-term bonds. The RBI also proposed that the banks should lay down a policy in this regard prescribing suitable margins, purpose of the loan and other safeguards. Such loans should be subject to a ceiling, say, Rs. 10 lakh per borrower, and tenure of loan should be within the maturity period of the bonds. Banks would not be permitted to lend against such bonds issued by other banks.
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7) In a surprise move the Reserve Bank of India (RBI) on 28 November 2014 scrapped the gold import curb scheme, popularly known as the 80:20 Scheme. This scheme required trading companies to export 20% of gold imported. When the scheme was imposed by RBI? – August 2013
Explanation: The 80:20 Scheme was put in place in August 2013 to curb gold imports, considered a major cause for the widening current account deficit. The move to curb this scheme came as a surprise because after gold imports surged 280.4% year-on-year in October 2014, the RBI had been in talks with the government for a decision on increasing curbs on gold imports. India’s trade deficit in October narrowed to $13.36 billion, after hitting an 18-month high of $14.2 billion in September 2014. The 80:20 Scheme ensured that at least one-fifth of every lot of imported gold is exclusively made available for the purpose of exports.
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8) The market capitalization of all listed companies on the Bombay Stock Exchange (BSE) hit which landmark figure on 28 November 2014? – Rs. 100 trillion
Explanation: BSE is the oldest stock exchange in Asia. The combined market capitaliastion of all listed companies on the exchange hit a record Rs. 100 trillion (1 lakh crore) mark in morning trade on 28 November 2014. Nearly 5,500 companies are listed on the BSE, but the top 100 companies make up for over 70% in market capitalization. Market capitalisation is used to compare companies in terms of their market value. So, to gauge BSE’s standing, its market cap should be seen in the global context. In dollar terms, BSE’s market cap is now nearly $1.7 trillion (at Rs. 60 per dollar). That is roughly one tenth the size of the New York Stock Exchange (NYSE), which has a market cap of nearly $18.8 trillion.
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9) On 27 November 2014 the World Trade Organization (WTO) clinched the first global trade deal after years of stalemate between its members. This historic deal is associated with which subject? – New standards for customs checks and border procedures
Explanation: The deal was adopted by 160 member countries barely a fortnight after India and the United States resolved a major dispute over food subsidies. It paved the way to remove a major irritant in adopting the trade facilitation agreement (TFA) to make global trade easier, faster and cheaper by making systems transparent and reducing red tape. The agreement means the WTO will introduce new standards for customs checks and border procedures. Proponents say this will streamline the flow of trade around the world, adding as much as $1 trillion and 21 million jobs to the world economy.
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10) In a major clampdown for suppression of material facts in IPO documents, SEBI on 29 November 2014 penalised merchant banking arms of SBI, ICICI, Kotak Mahindra, IDBI, DSP Merrill Lynch and Edelweiss groups in a public offer of 2012. This public offer was of which reputed rating agency? – CARE
Explanation: The IPO of CARE came in December 2012, prior to which these six bankers had filed a Red Herring Prospectus for the public issue involving sale of nearly 72 lakh shares. SEBI had discovered that merchant banking arms of SBI, ICICI, Kotak Mahindra, IDBI, DSP Merrill Lynch and Edelweiss had picked and chosen some material facts that they preferred to disclose and suppressed some material facts about the IPO. The six merchant banks have been asked to pay a fine of Rs.1 crore – the maximum penalty applicable for violation of disclosure related norms in IPO documents within 45 days.
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