Current Affairs in the Month - April 2012

Current affairs of April 2012 to face an Interview or any competitive exams.

Current Affairs on Banks, Telecoms and Oil and Gas industry has been updated in this article.

Banks

Changes in the bank rate or interest of the banks. 

• Reduced the bank rates from 9.5% to 9% where Banks/financial institutions pay to the central bank on borrowed funds.

• Repo and Reverse repo benchmark rate reduced by .50%, from 8.5% to 8%, and reverse repo from 7.5% to 7%.

• CRR (Cash Reserve Ratio) – has been reduced from 5.5% to 4.75%. The objective/reason for reduction of CRR is to infuse more money in the economy. It has infused Rs 48,000 crore.

• On the latest move, RBI has made it mandatory to print the MICR and IFSE code on the passbook and statement of account of the customers.  IFSC code is a pre-requisite for National Electronic Funds Transfer (NEFT) and Real Time Gross Settlement (RTGS) transactions.

• Saving Deposit rate is been deregulated.

Telecom

• Vodafone has won the case, where it has paid Rs.11,000 crore as tax for Income Tax (M&A) for buying out abroad firm Hutchison Whampoa Ltd's Indian mobile business in 2007. Supreme court has given an verdict favorable to Vodafone( earlier Bombay court's verdict was unfavorable) directing IT-department to return Rs.2500crores to Vodafone.

• Telecom Regulatory Authority of India (Trai) has made mandatory/compulsory to charge/bill only on per second basis ( introduced by Tata Docomo as its strategy to attract) to all prepaid and postpaid customers and allow the telecom player to increase the processing fee charge for Top up recharges(above Rs.20, from rs.2 to rs.3).

• Airtel is the first company in India to roll out 4G service.

• Samsung, South Korean firm the Market Leader in Smartphones segment posted its highest profits of $5.15 billion in this quarter, against the former leader Nokia, Finland based company has posted a huge loss of $1.2 bn (Jan-Mar).

-> Latest Facts and Figures of Banks and Economy 2012-13, for the latest Inflation rate, fiscal deficit rate and other deposit rate as on April 2012.

Oil and Gas

The Major Oil players in India are Hindustan Petroleum Corp Ltd (HPCL), Indian Oil Corp (IOC), and Bharat Petroleum Corp Ltd (BPCL). These companies has started threatening the government to increased the prices of petrol. 

Why?

Because, the current crude oil as on April 2012 is trading at $121.3 per barrel. Huge losses are being incurred/accrued in the books of these companies has they are selling the petrol below the market prices.

So currently Rs.8-Rs.10/- is the loss on per liter of petrol sold. and Rs.14 on diesel and of course a huge pie  on LPG gas Cylinder of Rs.570/each lpg cylinder.

Solution for Rise in Petrol Prices:

Now the States levied VAT or Sales tax, are ranging in between from 15 to 33 per cent (ie.,Rs.10-Rs.19/liter is being paid only as taxes), this has to be reduced so that the pressure will not be on the consumer by hiking the prices again. Goa has already implemented it, by removing the tax on petrol.

* Your feedback is appreciated. Other current affairs listed down here.

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Latest Facts and Figures of Banks and Economy 2012-13.

Here listed down all the major facts and figures of the Indian Banking rate and economy figures of current fiscal year as on April 2012-13.

	Percentage (%)
Bank Rate 2012	9%
Repo Rate	8%
Reverse Repo Rate	7%
Cash Reserve Ratio (CRR)	4.75%
Statutory Liquidity Ratio (SLR)	24%
Current Base Prime Lending Rate(BPLR):	10%-10.75%
Current Savings Bank Rate 2012:	4.0% (Deregulated)
Deposit Rate:	8.50-9.25%
Treasury Bill/Bond Rate (364-91 days)	8.1%-8.3%
Facts and figure as on 22th April 2012

(A 0.50%/50 basis points has been decreased as a part to control the inflation)

Economy Rates/Projected 2012-13
Current GDP Growth rate (current fiscal)	7.3%
Inflation (as on March end 2012-13)	6.5%
Current Fiscal Deficit Target rate	5.1%

The major changes has been made on CRR, Repo and Reverse Repo rate, along with savings bank rate deregulation. For more current affairs of banking sector check out here.

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Impact of Deregulation on Savings Bank Rate

In its recent move, RBI has deregulated the savings bank rate, which means, from now on wards the rate of savings bank account's can be fixed by the bank itself. Earlier the rate was fixed @4 p.c./annum (Current Rates of Banks). 


This move was immediately capitalized by Kotak Bank and Yes Bank, who has increased the Savings bank interest rate to 6% from 4%.  These are small banks whose prime objective now is to acquire new customers, so Kotak has already started advertising in full swing.  But the question raised to counter attack, why isn't the big banks are not offering a better savings rate, well the answer is simple: The book value of the deposits are very high and the interest need to paid for this is very high and it's not viable for these firms, so they have to offer some thing else to compensate. 

SBI, has offered a new product where giving 9% interest on Fixed deposit with an option of withdrawing the amount anytime after 7 days thus converting it like saving account anytime without any penalty for above Rs.1 crore amount. 

Thus this will either offer a better rate or product innovation can be observed in the near future.

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Implementation of New Technology in Indian Banking Industy

Now the Indian banking system is turning to a technology driven banking, thanks for the growing universalization and internalisation of banking operations. In the first major technology application was introduction of MICR in 1988.  

List of New Technology Changes in Indian Banking System:

Core Banking Systems: The introduction of Core Banking System (CBS).  The 5 main things which form part of Core Banking System is 

• General ledger Customer,
• Information System,
• Deposit system,
• Loan system, and 
• Management Information system.

INFINET (Indian Financial Network): This is used by large number of banks for funds and non-funds based transaction/transfers, and is developed by Institute for Development and Research in Banking Technology (IDRBT), Hyderabad. Public key infrastructure(PKI) technology is used by this network. 

National Electronic Funds Transfer System: This was introduced by RBI for an electronic fund transfer for efficient secure, economical with reliable system, and this is called as NEFT stytem.

National Electronic Clearing Services(NECS): The objective of NECS is to facilitate centralised processing for repetitive and bulk payment instructions.

Centralised Funds Management(CFMS): This system is to enable the operations on current accounts maintained by banks and various offices in an secure manner. It is maintained by RBI.

Mobile Banking Services:  The increasing mobile phone usage and introduction of 3G services has initiated this system where the transactions can be carried over mobile phones. Thus the bank and its customer can do a financial transaction actions through the use of mobile phones

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Overview of Banking Sector - September.

Here updates will be done constantly, on recent happenings in the banking sector especially in India. In this post you can see the recent major changes/ initiative by the RBI or other banks in the month of August and September 2011.  

Its just an overview of the Banking industry/sector current affairs.

• The RBI has come up with new guidelines (eligibility criteria) for the new banking license. Here is the New Eligibility Criteria for New Bank License.

• RBI has tightened the finance companies norms by increasing the capital requirement to 15% from 12%.

• NBFC's new rules under consideration. Where only NBFC's with assets worth of Rs.1000 crore should be regulated, even if they are doing business with their own funds.  This step will ensure that only players who are serious remain. 

• Top 10 Non-Banking Financial Companies(NBFC's)

• Company Name	Assets ( In crores) apprx
  Shriram TransFi	24,786
  M&M Financial	12,165
  Sundaramfin	11,479
  Cholamandalam	9,017
  Shriram City	8,539
  Bajaj Finance	8,066
  SREI infra	7,842
  Manappuram Finance	7,577
  Magma Fincorp	5,130
  First Leasing	1,297

• RBI said to end the Pre-Payment
(paying the loan amount before the maturity) penalty charges on floating rate loans,(home or car loan).  The bank charge as high as 3% on outstanding loan amount as charges. As this will discourage the loan seeker to end up the loan debt burden, bank has taken this step. Already banks like Axis has initiated this move.

• The Major Micro Finance companies, Spandana Spoorthy Fianacial Services and Share MicroFin and Ashmitha Microfin plan to merger their businesses, thus creating a largest lender for small entrepreneurs. As of now only SKS  Microfinance is the only listed major player.

• The increasing inflation has forced the RBI Governer, Subba Rao to make another increase in the interest rates by 25basic points(0.25%) which cumulative a 12th increase in the last 18months which is about an increase of 3.25%. 

Previous Month:

BANKING SECTOR CURRENT AFFAIRS: APRIL - MAY 2011

BANKING SECTOR CURRENT AFFAIRS: JUNE - JULY 2011

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New Bank License Eligibility rules by RBI.

As the Reserve Bank of India has opened the new players to enter the banking sector, has given a hope for many private major players to enter the booming sector where the scope is very high for growth and huge potential as most of rural market is still untapped.


The draft guidelines are being issued with regular modification with cautions and conditions for the purpose of laying a strong rules and regulations. 


Few Eligibility criteria as per the new guidelines are.,

• Minimum paid up capital of Rs.500 crores,
• Should get listed within 2 years of time,
• Should setup at least 25% of their branches in rural unbanked areas (especially tier-III) 
• Be owned by a separate holding company that cannot borrow money to float the bank.
• Foreign holding in the bank has to be less than 49%,
• Operating company has to get its share in the company to 20% within 10years from start.

Finance companies has a chance to convert themselves into bank and even promoter groups with good credential(10 years record will be considered) in running their business can setup banks.


The Major companies who are in the race for new bank licenses are.,

Tatas, Anil Dhirubhai Ambani Group(ADAG), Power Finance Corporation(PFC), Aditya Birla Group, Bajaj Group, Larsen & Toubro (L&T), LIC Housing, Industrial Finance Corporation of India(IFCI), Religare, Srei, Mahindra and Mahindra(M&M).

BANKING SECTOR CURRENT AFFAIRS: APRIL - MAY 2011

BANKING SECTOR CURRENT AFFAIRS: JUNE - JULY 2011
BANKING SECTOR CURRENT AFFAIRS: AUGUST - SEPTEMBER 2011

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Current Rates 2011

Due to Inflation rate still high and in an uncomfortable level, RBI has keep on increasing the bank rate to curb the inflation rate(almost 10 times in the last 15months). These are present rates in 2011.  


Bank Rate 2011: 6.0%
Repo Rate: 7.50% + 0.50% + 0.25% + 0.25% (as on 16/December/2011) = 8.25%
Reverse Repo Rate: 6.5% + 0.50% + 0.25%(16/December/2011) = 7.50%
(A further 0.50%/50 basis points has been increased as a part to control the inflation)


Cash Reserve Ratio(CRR): 6.0%
Statutory Liquidity Ratio(SLR): 24%


Base Prime Lending Rate: 9.25%-10.25%
Current Savings Bank Rate 2011: 4.0% (Now its been Deregulated)
Deposit Rate: 8.25-9.10%


Current Money at Call Rate: 5.50%-7.70%


Current Treasury Bills Rate:
91 Days Treasury Bill: 8.302%
182 Days Treasury Bill: 8.182%
364 Days Treasury Bill: 8.436%

*The above figures of current Repo, Reverse Repo, Bank Rate, Call Rate, CRR & SLR are as on 16 December 2011.

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Recent New Initiatives by Banks - 2011 [Current Updates]

Here is an constant update of Current affairs of Banking sector in the year 2011.

Here you could find an continuous updates  of different bank initiatives, achievements, innovations, landmarks created by the banks in India over an period of time which can help you in updating your current affairs knowledge on Banks and Banking sector. 


Previously a post was made, where you could find updates of the Banks current affairs in the Month April -May 2011. Click Here for it.

SBI completes its 50 lakhs Aadhaar Enrolments(UIDAI) in the country making it the largest Non-Government Registrar.  This is been used by SBI to reach out the unbanked villages as per Bank's Financial Inclusion Plan(FIP). [FYI: Pratip Chaudhuri is the Current Chairman of SBI, who has replaced OP Bhatt].


Co-Branding of Banks: SBI(State Bank of India) and BoM(Bank of Maharastra) Joins Hand, and launched a new co-branded credit card product suite, under the SBI-BoM name for the BoM customers. 


Bank of India has launched its new product "Door Step Banking".

Canara Bank, launched its mobile banking product called "CANMobile".
Greater Bank annouced E-Lobby Services 24x7, a stategy of Innovation and Technology focus and achivement of ISO 9001:2008 certification.


Indian Overseas Bank(IOB), Oriental Bank of Commerce(OBC), Punjab National Bank(PNB), and Bank of Baroda(BoB) is awarded RBI Rajbhasha Awards.


Union Bank Wins ACI Excellence Award 2011 for their project Customer empowerment, and Canara Bank bags Export Excellence Award for outstanding contribution made to the export growth in Karnataka.

Previous Month: BANKING SECTOR CURRENT AFFAIRS: APRIL - MAY 2011

Next Month BANKING SECTOR CURRENT AFFAIRS: AUGUST - SEPTEMBER 2011

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Online Credit Card Payment with Third Party Authorization.

Third party is  company that gathers and verifies the payment of funds that flow from one party to another.  The buyer need to register itself with the third party company. 

Steps involved Online Credit Card Payment through Online Third Party Processor(OTTP).  It is very easy to purchase anything online.

• After filling all the fields of registration form accurately, Online Third Party Processor account number is given to buyer that relays to the processor, information about buyers profile who uses a credit card as their financial device.
• The buyer sends a request to seller regarding the online purchase by specifying Online Third Party Processor(OTTP) account number. There are two ways in which the purchase request is made.
• The buyer gives the access privileges to seller who can access his/her account number and produces the bill.
• The buyer himself can enter the account details.
• The seller then submit the buyer;s account number to Online Third Party Processor(OTTP) accounting server to make an Online Credit Card Payment.
• Accounting server after receiving the account details verifies if the account number specifies is accurate and does the account have sufficient amount for making an online credit card payment.
• The accounting server then sends an email or any electronic message to the buyer who can make the acceptance/reject it.
• If Online Third Party Processor(OTTP) server receives positive acknowledgement, a message is send to the seller who then allow the buyer to access the resources if its an online product.
• OTTP Server will store the buyer's account details unless it receives the acknowledgement about the completion of the purchase process.

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Current Affairs on Banking Sector - 2011

Hope this information will be helpful to update your knowledge in Current affairs of Banking sector in the month April-May 2011. The high inflation has further made the RBI to keep changing the interest rates.


As the banking sector is one of the booming and having a great scope for business sector.  As the fresh new licences for the new player has not been given the old player are trying to capture by penetrating the market and retaining the customers with possible aggressive marketing and customer relationship management(CRM).  As the new player entering having a huge financial support and more importantly the reputation in other industries they currently into (Tata, Reliance Group, etc).


Here are the few recent news of banks, their achievement in recent past, new associations, Awards and Recognition, Growth and figures, and more importantly what new they can offer their customers. List of Indian Banks are



Next Month News: 
BANKING SECTOR CURRENT AFFAIRS: JUNE - JULY 2011


BANKING SECTOR CURRENT AFFAIRS: AUGUST - SEPTEMBER 2011


A Month wise updates in the Indian banking system is updates here. This is for the month of April - May 2011. Below you could find for the coming month direction.

• Indian Bank Introduces complaint through SMS facility.
• -To strengthen its customer grievance redressal mechanism its has introduced this facility.
• Punjab National Bank wins 6th BML Munjal (Brijmohan Lall) Award for 2010.
• - Awarded for excellence in learning and knowledge development in private sector category. Earlier the recipient of this award were.

Year	Private Sector	Public Sector
2006	Jet Airways	NTPC
2007	Infosys and Satyam	SAIL
2008	Mindtree Consulting	NHPC
2009	HSBC	Indian Oil Ltd.
2010	Tata Steel	ONGC
2011	Punjab National Bank	Tata Power

• United Bank of India opens its New Regional Office at Bangalore.(31st regional office).
• IndusIndBank get into an agreement with Finacle(which provides Core Banking Transformation Solutions and which is a part of Infosys Limited).
• Union Bank launches new facility in handling the New Pension Scheme(NPS) of Pension Fund Regulatory & Development Authority(PFRDA) through its branches.
• Allahabad Bank enters into 147th year (147th foundation day) and launches new services like Mobile Banking service, 100 ATM's, Mobile Van fitted with ATM. 
• Indian Overseas Bank(IOB) celebrated its 75th Anniversary.
• Vijaya Bank, Bank of Baroda, and State Bank of India(SBI) posted its financial results( where all three posted profits, where Vijaya Bank touched 1.22Lakh crore business and SBI posted 33% increase in its Net profit).
• Corporation Bank, Abhyudaya Bank, Dhanalakshmi and South India Bank are in spree of increasing its branches as soon as possible.
• Dena Bank takes the Swabhiman Card program(Financial inclusion program of Central government).

Update:
Indian Bank has received the Government of India approval to raise an additional equity capital of Rs.61.40 crore through Follow on Public Offer(FPO)(comprising 6.14crore equity share of Rs.10each) where the premium is not yet decided.

IDBI Bank and Indian Army signs a Memorandum of Understanding(MoU) for Banking services where the banks offers a wide range of banking services and products and customized salary accounts for the army personnel.

Bank-CSR Activities:
SBI Bank donated Rs.18.50lakhs rupees cheque to The Leprosy Mission trust India(TLM) for the reconstructuve surgery of clawed hands and legs of the affected leprosy patients.

United Bank of India opened Arsenic treatment plant in Gaighata Block, West Bengal.  The plant will provide arsenic free safe drinking water to around 3000 families in the locality.  

Next Update Available Here: 


Current Affairs in the Month - April 2012
BANKING SECTOR CURRENT AFFAIRS: JUNE - JULY 2011


BANKING SECTOR CURRENT AFFAIRS: AUGUST - SEPTEMBER 2011

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Role of Investment Bankers in Merger and Acquisition.

Investment banker plays an Important role in M&A.  They help the merging companies in many ways like.

• They help in organising mergers.
• They help target companies to develop and implement defensive tactics.
• They help in valuing the target company.
• They help in financing mergers and,
• They invest in stock of firms which are likely to merge.

Investment bankers gain huge profits through these merger related activities.

1. Organizing Mergers: Suppose steel manufacturers interested in merging with one of its suppliers such as iron or coal mining firm.  Investment bankers help steel manufactures to acquire its suppliers.
2. Developing Defensive Tactics: In order to avoid takeover by big firms, a target firm make use of Investment banking firm and a law firm.  Some of the defensive strategies are Golden parachutes, Poison pills, white square, white Knights etc.
3. Establishing a Fair Value.
4. Financing Mergers: If acquiring firms do not have enough fund of cash, then there is need for searching source of funds. (FYI: Earlier in 1980, Junk bonds were the only source for financing mergers and the primary developer for those were Drekel Burnham Lambert)
5. Arbitrage Operations: Here it refers to buying and selling of securities in different markets at different prices and taking risk free return.

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What are Functions of Commercial Banks?

Introduction to Bank and Financial System.

Primary Functions of Commercial Banks?
In the modern world, Commercial Banks has such an vital and huge role to perform, it makes so much difficult to put the list of functions and services.  Here are the few basic functions performed by the banks.

1) Accepting Deposits:
The first and the main Important function of the Commercial Banks is to accept deposits from those who can save but cannot profitably utilise those saving by themselves.  People consider it more rational to deposit their savings in a bank because by doing so they, earn interest and on other hand the money will be at the safe hands.  So, for attracting the savings from all sectors of individuals, the banks maintains different types of account which are suitable for the individuals they looking for.

a) Fixed Deposit Accounts:
Money in these accounts is deposited for fixed period of time and cannot be withdrawn before the maturity period, usually the minimum term varies from 2-5 years.  The rate of the interest on this account is higher than that on other types of deposits.  The longer the period, the higher will be the rate of interest.  Fixed deposits are also called Time deposits or Time Liabilities.

b) Current Account / Current Deposit Account:
These account are generally maintained by the traders and businessman who have to make a number of payments every day.  Money from these accounts can be withdrawn in as many times in as much amount as desired by the depositors .  Normally, no interest is paid on these accounts.  Rather, the depositors have to pay certain incidental charges to the Commercial Banks for the services rendered by it.  Current deposits are also called as Demand Deposits or Demand Liabilities.

c) Savings Account:
The aim of these accounts is to encourage thrift and mobilise small savings of the public.  Certain restrictions are imposed on the depositors regarding the number of withdrawals and the amount to be withdrawn in a given period.  Cheque facility is provided on request to the depositors.  Rate of interest paid on these deposits is low as compared to that on fixed deposits.


d) Recurring Account:
The purpose of these accounts is to encourage regular savings by the public, particularly by the fixed income group.  Generally money in these accounts is deposited in monthly installments for a fixed period and is repaid to the depositors along with interest on maturity.  The rate of interest on these deposits is close to the same as fixed deposits.

e) Home safe Account:
Home safe account is another scheme aiming at promoting saving habits among the people.  Under the scheme a safe is supplied to the depositor to keep it at home and to put his small savings in it. Periodically, the safe is taken to the bank and amount will be deposited in the account. 
But now a days, this process is not much in use.

2) Loan Advancing:

The another important function of a Commercial Banks is advancing of loans to public.  After keeping some cash reserves, the banks lend their deposits to the borrowers who are in need.  Before loans advancing, banks themselves satisfy about the credit worthiness of the borrowers. Other types of loans which is granted by banks are.

Call Money

a) Money at call / Call Money:

These loans are typically very short in period and the loan can be called back at a very short notice of time by the lending bank say even in one day to fourteen days.  These type of loans are generally to other financial institutions.

b) Cash Credit:

It is type of loan which is given to the borrower against his current assets, for example , stocks, shares, bonds etc.  Such loans are not based on personal security.  The banks opens an account in the borrowers name and allows to withdraw the money borrowed from time to time, up to a certain limit as determined by the value of his current assets.  Interest are charged for the amount withdrawn from the account.

c) Overdraft:

Commercial Banks provides overdraft facilities to its customer through which they are allowed to withdraw more than their deposits.  Interest is charged from the customers only on the overdrawn amount.

d) Discounting of Bills of exchange:

One of the very popular type of lending by modern banks, here the holder of the bill of exchange which can be get discounted at the bank.  In bill of exchange, the debtor agrees the drawn bill upon him by the creditor(ie.,the holder of the bill) and agrees to pay the amount mentioned at the time of maturity.  Thus the bank makes the payment and earn in the way of commission.  Thus it is an self-liquidating loan.

e) Term Loan:

This is an very common type of loan and very much in use these days.  These are medium and long-term loans with an maturity period of minimum one year.  The interest is charged on the whole loan amount and repaid either on installement or at a time of maturity.

f) Personal Loans:

Usually employed people can avail this type of loan for buying Motorcycles, Television, Refrigerators etc. The repayment will be in installment basis.

Credit card Swiping

g) Credit Cards:

Purchasing of goods and services without carrying any cash, is the main motive of introduction of Credit cards. The voucher/bill generated for goods purchased by swiping the card is sent to the banker by the vendor.  There is an credit limit imposed by the bank as per the credentials of the holder.

3) Promoting Cheque System:

Commercial Banks also create a very useful medium of exchange in the form of cheques.  Through a cheque, the depositor direct the bankers to make payment to the payee.  Cheque is the most developed credit instrument in the money market.  In the modern business transaction cheques have become much more convenient method of setting debts than the use of cash.

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