Current Affairs on Finance

With an aim to reduce risk in the banking sector, RBI on 29 March 2015 has proposed to limit exposure of a bank to a business group to what percent of its capital, down from the existing level of 55 percent?: 25 percent

Explanation: The RBI's proposal is in line with BCBS standards (BASEL norms on capital adequacy) where it has proposed through a draft that the sum of all the exposure values of a bank to a single counterpart or to a group of connected counterparties must not be higher than 25 percent of the bank's available eligible capital base at all times. The proposed 'Large Exposure' (LE) framework will be fully applicable from January 1, 2019 while seeking stakeholders' views on it till April 30.

Which Public sector entity became the first-ever public sector undertaking (PSU) to issue bonus debentures as done by it on 26 March 2015?: NTPC Ltd

Explanation: NTPC on 26 March 2015 became the first-ever PSU issuing bonus debenture issues. Under this bonus issue, it has issued one fully paid-up secured debenture of Rs. 12.50 each, for every one fully paid-up equity share of Rs. 10 each held by its members. Thus NTPC issued bonus debentures amounting to Rs. 7725.76 crore to Government of India by virtue of its 74.96% shareholding in NTPC. In addition to the bonus debentures, the Government of India has also received Rs. 2060.75 crore as dividend distribution tax on the debentures. The issue size of the bonus debenture came at Rs.10306.83 crore which is the biggest issue of its kind in the country and also the first ever by any PSU.

Prime Minister Narendra Modi will launch on April 8 the Rs 20,000 crore bank, which will be an agency to refinance micro-finance institutions which will also act as regulator for the sector. Name the Bank?: MUDRA Bank

Explanation:  The government proposes to set up the Bank through a statutory enactment. This bank would be responsible for regulating and refinancing all MFIs which are in the business of lending to micro or small business entities engaged in manufacturing, trading and services activities. Set up of Mudra Bank was announced by the finance minister in the budget 2015. MUDRA Bank will refinance Micro-Finance Institutions through a Pradhan Mantri Mudra Yojana. However bank would also partner with state level/regional level coordinators to provide finance to last mile financier of small/micro business enterprises. It would lay down policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulation of MFI entities and accreditation /rating of MFI entities. It will also frame guidelines for financing practices to ward-off indebtedness and ensure proper client protection principles and methods of recovery. 

The National Commodity and Derivatives Exchange (NCDEX) is planning to participate in the bidding process of which kind of fund, which will be rolled out by the government to boost the agricultural marketing system?: Agri-Tech Infrastructure Fund (ATIF)

Explanation: In order to develop a common national market for farm commodities through e-platform, the Department of Agriculture (DAC) has approved Rs 200 crore for a central scheme for promotion of agricultural market through ATIF to be implemented between 2014-15 and 2016-17. Thus, National Commodity and Derivatives Exchange (NCDEX) signed an agreement with the Karnataka Government to form a joint venture company to modernize Agricultural Produce Market Committee (APMC). NCDEX will roll out pilots to modernize APMC in Tamil Nadu, Andhra Pradesh and Telangana. The leading commodity exchange is also in talks with States like Uttar Pradesh, Gujarat and Madhya Pradesh to modernize APMCs in line with Karnataka.

Sebi on 23 March 2015 allowed Jaipur Stock Exchange Ltd (JSEL) to exit as a which biz Category from the nation's capital markets.?: Bourse Biz

Explanation:  The central government had granted recognition to JSEL, as a stock exchange on January 9, 1989, initially for a period which was renewed from time to time. Last renewal by Sebi was for a period of one year commencing on January 9, 2014 and ending on January 8, 2015. According to Sebi, Jaipur Stock Exchange Limited - JSEL had complied with the regulator's exit norms and made payment of necessary dues to the regulator, including 10 per cent of the listing fee and the annual regulatory fee. 

Sebi on 22 March 2015 relaxed its norms by dropping which rule which is required on investment by an individual, for funds from low-risk foreign investors.?: The '20-25 rule', which required a minimum of 20 investors and a cap of 25 percent

Explanation: After this relaxation, it will enable local fund managers to manage offshore funds effectively and also garner more offshore business in the future in comparison to existing rule where fund manager who is managing a domestic scheme, is allowed to manage an offshore fund subject to three specific conditions:

1) The first requires the investment objective and asset allocation of the domestic scheme and of the offshore fund to be the same.

2) The second condition requires at least 70 percent of the portfolio to be replicated across both the domestic scheme and the offshore fund.

3) The third condition, which was being considered as the most stringent by the industry, requires that the offshore fund should be broad-based with at least 20 investors with no single investor holding more than 25 percent of the fund corpus.

Majority of offshore funds follow MSCI India Index as their benchmark while none of the local funds follow MSCI India Index. The composition of MSCI India Index is different as compared to local benchmarks such as Nifty, Sensex, CNX 500, BSE 100 or BSE 200. Sebi has classified FPIs into three categories, with the first two broadly being low-risk foreign institutions that include sovereign wealth funds, pension funds, banks, mutual funds, insurers, multi-lateral institutions and well-regulated foreign entities including portfolio managers.