Current Affairs Economy & Banking

  Moody’s Investors Service stated that G-20 countries are expected to grow by 2.1% in 2020. Moody’s cuts 0.3 percentage points lower than its previous forecast, as the global spread of the coronavirus, is resulting in simultaneous supply and demand shocks. It cautioned that global recession risks have risen. The global credit rating agency is expecting these shocks to materially slow economic activity, particularly in the first half of this year (2020). The G-20 grouping includes advanced economies such as the US, Euro area, Japan, Germany, and the UK, and emerging economies such as China, India, Brazil, Russia, and Mexico.

  The Central Government of India imposed temporary prohibition of the activity of the capital-starved Yes Bank and capped withdrawals at Rs. 50,000 per account after considering an application made by the Reserve Bank of India. The board of Yes Bank has been superseded with immediate effect by the Reserve Bank of India (RBI). The RBI also assured the depositors of the bank that their interest will be fully protected and there is no need to panic. Former SBI CFO Prashant Kumar has been appointed as administrator of Yes Bank. Yes Bank has been grappling with mounting bad loans. The latest development comes six months after the regulator did the same with the city-based cooperative lender PMC Bank after a large scam was unearthed.
The depositors will be allowed to withdraw more than Rs. 50,000 under the following conditions:
  • In connection with the medical treatment of the depositor or any person actually dependent on him.
  • Towards the cost of higher education of the depositor or any person actually dependent on him for education in India or outside India.
  • To pay obligatory expenses in connection with marriage or other ceremonies of the depositor or his children or of any other person actually dependent upon him.
  • In connection with any other unavoidable emergency.

  According to Union Finance Minister Nirmala Sitharaman, the exercise of consolidation of 10 public sector banks (PSBs) into four is on course and the merger will come into effect from the new financial year 1st April 2020. The Union Cabinet has given a go-ahead for the merger proposal. The Central government has been in regular touch with these banks. Finance Minister stated that the merger of Public Sector Banks’ merger is on course and decisions have already been taken by the respective bank boards. In the biggest consolidation exercise in the banking sector, the union government in August 2019 had announced four major mergers of public sector banks, bringing down their total number to 12 from 27 in 2017.
As per the plan, PSBs will be merged into:-
  • 1. United Bank of India and Oriental Bank of Commerce will be merged with Punjab National Bank
  • 2. Syndicate Bank will be merged with Canara Bank
  • 3. Allahabad Bank will be amalgamated with Indian Bank
  • 4. Andhra Bank and Corporation Bank will be consolidated with Union Bank of India
The Plan had been first publicly mooted in December 2018 when Central Bank of India (RBI) stated that India could create some global banking majors if the then ongoing mergers of some state-owned banks achieve the desired impact of creating stronger and well-capitalized lenders of international level. In 2019, Mumbai based Dena Bank and Bengaluru based Vijaya Bank were merged with Bank of Baroda. Prior to this, the central government had merged five associate banks of State Bank of India and Bharatiya Mahila Bank with the State Bank of India effective from 1st April 2017.

  National Bank for Agriculture and Rural Development (NABARD) has sanctioned 400.64 crore rupees to the Union Territory of Jammu and Kashmir. This sanction is for giving a boost to the infrastructure in the rural areas of J&K. An amount of 143.66 crore rupees has been sanctioned for implementation of 38 water supply schemes. The sanction includes augmentation of 27 existing water supply schemes and construction of 11 new water supply schemes. These water supply schemes are aimed at providing safe and potable drinking water to rural households. The schemes will benefit over 3.5 lakh people across 86 villages in 17 districts. An amount of 47.11 crore rupees has been sanctioned towards improving the Animal and Sheep Husbandry sectors. It includes the construction of Cattle Breeding Farm at Chatha Jammu. NABARD has also sanctioned 209.87 crore rupees for construction of 82 rural roads and 3 bridges earlier this year. The construction of roads and bridges would provide all-weather improved connectivity to 461 remote villages. The funding is a part of the NABARD’s Rural Infrastructure Development Fund (RIDF) which is aimed at augmenting rural infrastructure.

  According to the report of US-based think tank “World Population Review”, India has emerged as the 5th-largest world economy in 2019, overtaking the United Kingdom and France. India’s economy is the fifth-largest in the world with a gross domestic product (GDP) of $2.94 trillion. The size of the UK economy is $2.83 trillion and that of France is $2.71 trillion. These measures have helped India accelerate economic growth. In purchasing power parity (PPP), India’s GDP is $10.51 trillion, exceeding that of Japan and Germany. Due to India’s high population, India’s GDP per capita is $2,170 (for comparison, the US is $62,794). India’s real GDP growth is expected to weaken for the third straight year from 7.5% to 5%. According to the report, India’s service sector is the fast-growing sector in the world accounting for 60% of the economy and 28% of employment. The manufacturing and agriculture are two other significant sectors of the economy. The report observed that India’s economic liberalisation began in the early 1990s and included industrial deregulation, reduced control on foreign trade and investment, and privatisation of state-owned enterprises.

  India’s reinsurance company, General Insurance Corporation of India (GIC Re) has received the license from Central Bank of the Russian Federation (Bank of Russia) to commence reinsurance business in Russia. The license enables the subsidiary to commence transacting domestic and international reinsurance business in Russia based on the capital invested by the Corporation.

  The Union Ministry of Finance has notified ‘Printing of One Rupee Currency Notes Rules, 2020’ vide Gazzette Notification G.S.R. 95(E) dated February 7, 2020. “The One Rupee notes shall be printed at the note printing presses for issue under the authority of Government of India for circulation.
  • New one rupee note dimensions
The One Rupee currency note shall be rectangular 9.7 x 6.3 cms, with its paper made of 100 per cent (cotton) rag content. The note will be 110 microns thick, weighing 90 GSM (Grams per Square Meter). It will also have multi-tonal watermarks with Ashoka Pillar in the window without the words ‘??????? ????’ (Satyamev Jayate), hidden numeral ‘1’ in the centre and the hidden word ‘????’ (Bharat) vertically arranged on the right-hand side.
  • New one rupee note design
The Obverse side of one rupee note will contain the words “???? ?????? above the words “Government of India” with the bilingual signature of Shri Atanu Chakraborty, Secretary, Ministry of Finance and with the replica of New Rupee One coin with ‘?’ symbol of 2020 issued with ‘??????? ????? and capital Inset letter ‘L’ in numbering panel. The design surrounding will be of the Sagar Samrat, which is an oil exploration rig. The rig drilled the first offshore well in 1974 and has been in service with the Oil and Natural Gas Corporation (ONGC) since.
  • New one rupee note colour
The overall colour of One Rupee Currency note will be predominantly pink green on obverse and reverse in combination with others.
  • History of currency note in India
Currency notes were introduced in India in 1861, and the one-rupee note was introduced by the British on November 30, 1917. Although the printing of the note was discontinued in 1994, it was reintroduced in 2015 after a gap of 22 years.

  The Pension Fund Regulatory and Development Authority (PFRDA) has decided to increase the minimum net worth criterion for pension fund managers. The minimum net worth criterion for pension fund managers has been increased from Rs 25 crore to Rs 50 crore. This enhancement in the minimum net worth criterion for pension fund managers will bring pension funds on par with mutual funds which have to meet a minimum net worth requirement of Rs 50 crores as per Securities and Exchange Board of India (SEBI) rules. The fresh guidelines states that the licenses issued to the pension fund managers will remain valid until cancelled by the regulator as compared to the five years validity of the previously granted licenses. So, new guidelines will made provision for licenses to have indefinite validity and hence, will help the pension sector to grow to new levels.

  Deposit Insurance and Credit Guarantee Corporation (DICGC) increases the insurance coverage for depositors in all insured banks from Rs 1 lakh to 5 lakh with effect from February 4, 2020, with the approval of Government of India. The rate of premium payable by the insured banks will be raised from 10 paise per Rs 100 of assessable deposits to 12 paise per Rs100 of assessable deposits per annum. This step is taken with a view to providing a greater measure of protection to depositors in banks the Deposit Insurance and Credit Guarantee Corporation, a wholly-owned subsidiary of the Reserve Bank of India. Thus in terms of Section 16 (1) of Deposit Insurance and Credit Guarantee Corporation Act 1961, the limit of the total amount payable by the Corporation to any one depositor in respect of his/her deposits with an insured bank in the same right and capacity shall be 75 lakh.

  Fitch Ratings has estimated India’s GDP growth of 5.6% in the next FY21 in its India Economic Outlook. This forecast is lower than the projection made by the government’s Economic Survey. For the current fiscal 2019-20 (FY 20), GDP is projected at 4.6%. Fitch has also estimated that in the fiscal year 2022, government debt will remain 70% of total GDP.

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