Banking/Financial Awareness

1) What was the gross non-performing assets (NPAs) of public sector banks as on December 2014 as disclosed by the Reserve Bank of India (RBI) recently? – Rs. 2,60,531 crore

Explanation: While the gross NPA of public sectors banks stood at Rs. 2,60,531 crore at the end of December 2014, the contribution of top 30 defaulters in this amount was as high as Rs. 95,122 crore, which is more than one-third of the entire NPA. In terms of percentage it amounts to 36.5%. As per the data made available by the RBI, the total number of NPA borrowers having Rs. 10 crore and above at the end of September 2014 stood at 2,897 with outstanding amount of Rs. 1,60,164 crore.

2) Indian Railways on 11 March 2015 signed a Memorandum of Understanding (MoU) that will raise Rs. 1.5 lakh crore worth of funds to finance its infrastructure. This is the largest-ever funding in Railways’ history. This historic MoU was signed with which financial entity? – Life Insurance Corporation of India (LIC)

Explanation: Under this MoU, the LIC will make available to the Ministry of Railways/its entities a financial assistance with a limit of Rs. 1,50,000 crore over the next five years for implementing its infrastructure projects. The financial assistance will be available from the financial year 2015-16. The railways will use the funds to augment its capacity. LIC will invest in bonds issued by various railway entities such as Indian Railways Finance Corporation (IRFC), beginning next fiscal. There would be a five-year moratorium in interest and loan repayment. The bonds will have a tenor of 30 years and will be disbursed over the next five years. In his Budget Speech, Union Rail Minister Suresh Prabhu had announced his intention of meeting a part of the total Plan Budget of Rs. 1,00,011 crore for the financial year 2015-16, through extra budgetary resources, such as market borrowings by tapping low cost long term funds.

3) According to the information given by the govt. in Parliament on 11 March 2015, two public sector undertakings (PSUs) were added to the list of sick PSUs. There were as many as 65 units in the list of sick PSUs as on 31 March 2014. Which two PSUs are these? – Air India and MTNL

Explanation: Air India and MTNL, once market leaders in aviation and mobile telephony sectors respectively, were declared sick as per the criteria for a PSU to be declared as such, after they incurred losses worth 50% or more of their average net worth during four preceding years. Govt. also announced that it will close down 5 PSUs that include three HMT units whose brand of watches and tractors once ruled the market. However, name of other PSUs to be closed were not provided.

4) Which associate bank of the State Bank Group on 8 March 2015 announced a 10 basis-point cut in the base rate to 10.15% and with thus became first major to come out with a rate cut in the post-Budget phase? – State Bank of Travancore (SBT)

Explanation: State Bank of Travancore (SBT) announced a 10 basis-point cut in the base rate to 10.15% effective from 16 March 2015. It became the first major bank to announce rate cut after RBI’s second Repo rate cut of the year was announced on March. It is worth mentioning that the SBT has sought to cut base rate at a time when even market leader and parent SBI was mulling its option.

5) Which company recently became the private company in the Indian life insurance industry to cross Rs. 1 lakh crore mark in Assets Under Management (AUM) as announced during March 2015? – ICICI Prudential Life Insurance Company

Explanation: ICICI Prudential Life Insurance Company had started its operations in India in December 2000 shortly after the insurance sector in the country was opened for the private companies. Company’s AUM recently crossed the figure of Rs. 1 lakh crore and thus became the first private company in the Indian life insurance industry to achieve the milestone. ICICI Prudential is now the largest private player in country’s life insurance space. The AUM for a life insurer qualitatively symbolizes the amount of trust placed by policyholders in the company.

6) The Reserve Bank of India (RBI) on 13 March 2015 entered into a $1.5 billion currency swap agreement with the central bank of Sri Lanka. What is the primary objective of this agreement? – To help keep the Sri Lankan rupee stable

Explanation: Sri Lanka rupee has been under pressure since January 2015 and fallen around 1.5% so far this year despite the fact that the Sri Lankan central bank defended it with selling dollars.

7) What was the insurance penetration in India during 2013 as informed by the government in Parliament on 10 March 2015? – 3.9%

Explanation: The Parliament was informed that the penetration for the insurance sector as a whole in the year 2013 was 3.9% in India, as against world average of 6.3%. Insurance penetration, measured as the ratio of premium to Gross Domestic Product (GDP), was 3.1% of life insurance and 0.8% for general insurance in 2013. The level of insurance penetration depends on a large number of factors like level of economic development of the country, the extent of the savings in financial instruments and the size and reach of the insurance sector. In relation to BRICS countries, India’s insurance penetration was better than China and Russia but well below South Africa and only a tad lower than Brazil. The insurance penetration of South Africa stands at 15.4% (in 2013); China 3%; Brazil 4% and Russia 1.3%.

8) The NDA govt. led by Narendra Modi was able to pass its first major reform bill in the form of the Insurance Laws (Amendment) Bill, 2015 when it was passed by the Rajya Sabha on 12 March 2015. The lower house (Lok Sabha) had already passed this bill. When the insurance bill was first introduced in the Parliament? – 2008

Explanation: The bill was first introduced by the UPA govt. in 2008. It sought to raise the FDI cap in insurance sector from 26% to 49% among several other provisions and was opposed by the BJP then. Now with the passing of the Insurance Laws (Amendment) Bill, 2015, an earlier ordinance issued in 2014 by the Narendra Modi government will be replaced. The legislation will shake up India’s overcrowded life insurance sector, allowing global insurers such as Britain’s Prudential and others to increase their Indian stakes. The passage of the bill represents a rare victory for Modi, who was elected last May on a promise of jobs and economic growth.

9) Which company is the largest in India in terms of assets as disclosed by the recent data compiled by the Corporate Affairs Ministry? – Reliance Industries Ltd (RIL)

Explanation: According to data compiled by the Corporate Affairs Ministry, RIL is the country’s largest corporate with assets worth Rs. 3.68 lakh crore, followed by state-owned Indian Oil Corporation (IOC) and mortgage lender (Housing Development Finance Corp (HDFC). At the end of March 2014, RIL’s assets stood at Rs. 3.68 lakh crore, while that of IOC and HDFC was at Rs. 2.52 lakh crore and Rs. 2.25 lakh crore, respectively. Other entities in the top ten are Power Finance Corp (4), NTPC (5), Rural Electrification Corp (6), Power Grid Corp (7), LIC Housing Finance (8), Steel Authority of India (9) and Bharat Sanchar Nigam Ltd (10). Power Finance Corp’s assets stood at Rs. 1.94 lakh crore, NTPC (Rs. 1.80 lakh crore), Rural Electrification Corp (Rs. 1.53 lakh crore), Power Grid Corp (1.40 lakh crore), LIC Housing Finance (Rs. 95,777 crore), Steel Authority of India (Rs. 91,962 crore) and Bharat Sanchar Nigam Ltd (Rs. 89,333 crore). In the list of top 10 corporates in terms of assets, RIL and HDFC were the only two firms from the private sector. The list is based on data from 4,15,886 companies which had filed their balance sheets for the year 2013-14 till 30 November 2014.

10) Country’s jewellers have put forth its demand to the Union Govt. to scrap the mandatory requirement of Permanent Account Number (PAN) Card during purchase of gold ornaments. They feel that this step announced in the Union Budget of 2015-16 would be impractical to implement and hurt the jewellery sector. What is the buying limit for PAN cards? – Above Rs. 1 lakh

Explanation: In the Union Budget 2015-16, the Finance Minister had mandated that PAN card has to be produced for purchase of gold ornaments above Rs. 1 lakh. This provision was announced to prevent the circulation of black money which easily gets converted into gold bars or jewellery. The All India Gems and Jewellery Trade Federation (GJF), the national federation of the gems & jewellery sector, feels that this move would discriminate against 70% of the rural buyers who do not have PAN cards and do not come under the income tax net. According to jewellers, the requirement of PAN card would result in shifting of business from law-abiding jewellers to unscrupulous elements in the trade.