International Monetary Fund (IMF) Announced Annual Report of India’s economic growth for 2014-15 will be 5.4 percent
International Monetary Fund (IMF) on 20 February 2014 released its annual report on the state of the Indian economy and projected that India’s economic growth for 2014-15 will be 5.4 percent. In its release it said that India has restored macroeconomic and financial stability but structural impediments to growth and persistently high inflation is the major areas of concern. It has also suggested India to strengthen its inflation management policies and do away with supply bottlenecks for better GDP.
In its forecast, IMF (multilateral agency) said that inflation driven food prices seems to remain near double digits in 2014-15. It also said that the tight monetary policy would slow the growth recovery. In its forecast for the fiscal year 2013-14, it projected that India’s growth will be 4.6 percent and will pick up to 5.4 percent in 2014-15 at factor cost. These projections of India were a conclusion of its annual discussions with India.
India’s National Food Security Act has been described by IMF as landmark legislation which will ensure that a majority of population of the country will have access to adequate quantities of food at affordable prices. IMF also said that the Consumer Price Index (CPI) could push up due to weaker rupees and ongoing energy price increases.
To tackle price rise, IMF has asked the high Inflation countries of G20 nations like India to strengthen their fiscal and monetary policy framework. For G20 countries, IMF has also asked to better their supply infrastructure, which will help in doing away bottlenecks to achieve faster growth poverty reduction and job creation.
The G20 leaders’ meet will start in Sydney on 22 February 2014.
Earlier on 17 February 2014, the Union Finance Minister of India, P Chidambaram in his interim budget projected that the economy will pick up and the objective of 6 percent growth is doable in the fiscal year 2014-15. RBI appointed committee has also suggested focus of the central bank should be towards CPI inflation and its recommendation it has asked to bring down the CPI inflation to 8 percent in 2014-15 and to 6 percent by 2016.
About the International Monetary Fund (IMF) :
The International Monetary Fund (IMF) is an organization of 188 countries and is working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. It is headquartered in Washington, US. The IMF has played a part in shaping the global economy since the end of World War II.
IMF PRESIDENT – CHRISTINE LAGARDE
Functions and Objectives of G 20 Group
The Group of Twenty Finance Ministers and Central Bank Governors (also known as the G-20, G20, and Group of Twenty) is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank
Australia, which is the host of the G-20, wants the ministers to agree to a substantial plan to achieve collective global goal of promoting growth and lifting economies which are still reeling under the impact of slowdown.
Indian finance minister P Chidambaram who also reached Sydney will also pitch for greater transparency in the US Fed’s tapering operations, expeditious reforms of IMF and automatic sharing of tax information.
Besides the Minister, the Indian delegation at the G20 ministerial comprises Reserve Bank Governor Raghuram Rajan and senior officials of the Finance Ministry including Economic Affairs Secretary Arvind Mayaram.
This event is the first major G20 meeting under Australia’s presidency in 2014. Australia will also host G20 Leaders Summit which will be held on15 and 16 November in Brisbane, Queensland which will chair byTony Abbott, Prime Minister of Australia.
The Group of Twenty Finance Ministers and Central Bank Governors (also known as the G-20, G20, and Group of Twenty) is a group of finance ministers and central bank governors from 20 major economies: 19 countries plus the European Union, which is represented by the President of the European Council and by the European Central Bank.
The G-20 was proposed by former Canadian Prime Minister Paul Martin as a forum for cooperation and consultation on matters pertaining to the international financial system.
The group was formally inaugurated in September 1999, and held its first meeting in December 1999.
G-20 members represent around:
1. 85 per cent of global gross domestic product
The members of the G-20 are:
It studies, reviews, and promotes high-level discussion of policy issues pertaining to the promotion of international financial stability, and seeks to address issues that go beyond the responsibilities of any one organization.
The G-20 Presidency rotates annually according to a system that ensures a regional balance over time. Reflecting its nature as an informal political forum, the G20 does not have a permanent secretariat.
Instead, the G-20 President is responsible for bringing together the G-20 agenda in consultation with other members and in response to developments in the global economy.
To ensure continuity, the Presidency is supported in this by the “troika”,made up of the current, immediate past and future host countries.
During Australia’s host year, the members of the G20 troika are Australia, Russia and Turkey.
Note: On 4 November 2011, G-20 leaders agreed that Australia would host the G-20 in 2014. Australia takes over the presidency of the G-20 on 1 December 2013 from Russia, and Turkey will succeed Australia in December 2015.
The G20 works closely with international organizations which are invited to attend a relevant G20 meeting which includes:
1. Financial Stability Board
2. International Labour Organisation
3. International Monetary Fund
4. Organisation for Economic Co-operation and Development
5. United Nations
6. World Bank and the
7. World Trade Organization.
The Unit Banking System is that system of banking under which an individual bank carries on banking business either through a single office or through a few offices operating with a limited area. In this system, independent, isolated units perform banking business. The size of operation of Unit Banking are much smaller when compared to branch banking. Unit banking system originated in the USA.
ADVANTAGES AND DISADVANTAGES OF UNIT BANKING SYSTEMS
MERITS OF UNIT BANKING
1. Local Development: Unit banking is localized banking. The unit bank has the specialized knowledge of the local problems and serves the requirements of the local people in a better manner than branch banking. The funds of the locality are utilized for the local development and are not transferred to other areas.
2. Promotes Regional Balance: Under unit banking system, there is no transfer of resources from rural and backward areas to the big industrial commercial centres. This tends to reduce regional in balance.
3. Easy Management: The management and supervision of a unit bank is much easier and more effective than that under branch banking system. There are fewer chances of fraud and irregularities in the financial management of the unit banks.
4. Initiative in Banking Business: Unit banks have full knowledge of and greater involvement in the local problems. They are in a position to take initiative to tackle these problems through financial help.
5. No Monopolistic Tendencies: Unit banks are generally of small size. Thus, there is no possibility of generating monopolistic tendencies under unit banking system.
6. No Inefficient Branches: Under unit banking system, weak and inefficient branches are automatically eliminated. No protection is provided to such banks.
7. No dis-economies of Large Scale Operations: Unit banking is free from the dis-economies and problems of large-scale operations which are generally experienced by the branch banks.
8. No delay in taking decisions: In unit banking system, every bank is an independent unit. Hence, there will be no delay in decisions taking.
9. Personal Contact with the customers: Unit Banking System being a small scale independent unit can maintain good personal contacts with the customers for efficient management of the bank. It is said that in case of unit banking system the manager can maintain good personal contact with the customers and businessmen.
10. Low overhead cost: In case of Unit Banking, the overhead cost will be low than in case of branch banking system.
11. More operational freedom: The managers of the Unit Banking system are given more discretionary powers so that they can study the problems of local customers and provide better services to them on merit.
DEMERITS OF UNIT BANKING
The following are the disadvantages of unit banking system:
1. No. Distribution of Risks: Under unit banking, the bank operations are highly localised. Therefore, there is little possibility of distribution and diversification of risks in various areas and industries.
2. Inability to Face Crisis: Limited resources of the unit banks also restrict their ability to face financial crisis. These banks are not in a position to stand a sudden rush of withdrawals.
3. No Banking Development in Backward Areas: Unit banks, because of their limits resources, cannot afford to open uneconomic banking business is smaller towns and rural area. As such, these areas remain unbanked.
4. Lack of Specialization: Unit banks, because of their small size, are not able to introduce, and get advantages of, division of labour and specialization. Such banks cannot afford to employ highly trained and specialized staff.
5. Costly Remittance of Funds: A unit bank has no branches at other place. As a result, it has to depend upon the correspondent banks for transfer of funds which is very expensive.
6. Disparity in Interest Rates: Since easy and cheap movement of does not exist under the unit banking system, interest rates vary considerably at different places.
7. Local Pressures: Since unit banks are highly localised in their business, local pressures and interferences generally disrupt their normal functioning.
8. Undesirable Competition: Unit banks are independently run by different managements. This results in undesirable competition among different unit banks.
Bill Of Exchange: A non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date. A bill of exchange is also called a draft.
Bills of exchange are similar to checks and promissory notes. They can be drawn by individuals or banks and are generally transferable by endorsements.
The difference between a promissory note and a bill of exchange is that this product is transferable and can bind one party to pay a third party that was not involved in its creation.
If these bills are issued by a bank, they can be referred to as bank drafts. If they are issued by individuals, they can be referred to as trade drafts.
Following are the various parties related to a Bill of Exchange:
a. The Drawer: The person who draws the bill and puts his signature on it is known as the drawer of the bill. He is also called the “maker” of the bill.
b. The Drawee: The person on whom the bill is drawn is called as the drawee of the bill.
c. The Acceptor: The person who accepts the bill is known as the acceptor of the bill. Usually, the drawee accepts the bill. But sometimes, a third party may also accept a bill on behalf of the drawee. The acceptor puts down his signature across the bill showing his acceptance.
d. The Payee: The person to whom the amount of bill is to be paid is known as payee of the bill. The drawer may make the bill payable to himself or to any other person he likes.
e. The Endorsee: The holder of the bill may endorse the bill in favour of someone else known as endorsee. The person who endorses the bill is called endorser.
f. The Holder: The person who holds the bill and is entitled to realise the amount of the bill from the drawee is known as holder of the bill.
Essentials of a bill of exchange:
In order that an instrument may be called a bill of exchange it should satisfy the following conditions:
1. The order to pay a bill must be unconditional one.
2. The order to pay must be made in writing on the bill.
3. The bill must be signed by the drawer of the bill. Without signature of the drawer the bill will not be genuine one.
4. The order to pay under a bill must be addressed to a certain person which, of course, includes individuals, firm, company, corporation etc.
5. The amount to be paid under a bill must be certain one.
6. The money under a bill must be paid in legal tender currency.
7. The amount should be payable to or to the order of a specified person or to the bearer of the instrument.
8. The amount should be payable either on demand or at a fixed determinable future time.
9. The bill must be duly stamped.
10. The other formalities like dating, stating the names of the parties concerned etc. must be observed.
11. A bill of exchange like a promissory note may be written in any language. It may be written in any form of words provided the requirements of the section are complied with.
Financial Inclusion – Role of Indian Banks in Reaching Out to the Unbanked
Even after 60 years of independence, a large section of Indian population still remain unbanked. This malaise has led generation of financial instability and pauperism among the lower income group who do not have access to financial products and services. However, in the recent years the government and Reserve Bank of India has been pushing the concept and idea of financial inclusion.
What is Financial Inclusion in banking ? What is meaning of Financial Inclusion in Indian context ? :
Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups (for example “no frill accounts”).
Why Financial Inclusion in India is Important ?
The policy makers have been focusing on financial inclusion of Indian rural and semi-rural areas primarily for three most important pressing needs:
1. Creating a platform for inculcating the habit to save money – The lower income category has been living under the constant shadow of financial duress mainly because of the absence of savings. The absence of savings makes them a vulnerable lot. Presence of banking services and products aims to provide a critical tool to inculcate the habit to save. Capital formation in the country is also expected to be boosted once financial inclusion measures materialize, as people move away from traditional modes of parking their savings in land, buildings, bullion, etc.
2. Providing formal credit avenues – So far the unbanked population has been vulnerably dependent of informal channels of credit like family, friends and moneylenders. Availability of adequate and transparent credit from formal banking channels shall allow the entrepreneurial spirit of the masses to increase outputs and prosperity in the countryside. A classic example of what easy and affordable availability of credit can do for the poor is the micro-finance sector.
3. Plug gaps and leaks in public subsidies and welfare programmes – A considerable sum of money that is meant for the poorest of poor does not actually reach them. While this money meanders through large system of government bureaucracy much of it is widely believed to leak and is unable to reach the intended parties. Government is therefore, pushing for direct cash transfers to beneficiaries through their bank accounts rather than subsidizing products and making cash payments. This laudable effort is expected to reduce government’s subsidy bill (as it shall save that part of the subsidy that is leaked) and provide relief only to the real beneficiaries. All these efforts require an efficient and affordable banking system that can reach out to all. Therefore, there has been a push for financial inclusion.
What are the steps taken by RBI to support financial inclusion?
RBI set up the Khan Commission in 2004 to look into financial inclusion and the recommendations of the commission were incorporated into the mid-term review of the policy (2005–06) and urged banks to review their existing practices to align them with the objective of financial inclusion. RBI also exhorted the banks and stressed the need to make available a basic banking ‘no frills’ account either with ‘NIL’ or very minimum balances as well as charges that would make such accounts accessible to vast sections of the population
Of the many schemes and programmes pushed forward by RBI the following need special mention.
A. Initiation of no-frills account – These accounts provide basic facilities of deposit and withdrawal to accountholders makes banking affordable by cutting down on extra frills that are no use for the lower section of the society. These accounts are expected to provide a low-cost mode to access bank accounts. RBI also eased KYC (Know Your customer) norms for opening of such accounts.
B. Banking service reaches homes through business correspondents – The banking systems have started to adopt the business correspondent mechanism to facilitate banking services in those areas where banks are unable to open brick and mortar branches for cost considerations. Business Correspondents provide affordability and easy accessibility to this unbanked population. Armed with suitable technology, the business correspondents help in taking the banks to the doorsteps of rural households.
C. EBT – Electronic Benefits Transfer – To plug the leakages that are present in transfer of payments through the various levels of bureaucracy, government has begun the procedure of transferring payment directly to accounts of the beneficiaries. This “human-less” transfer of payment is expected to provide better benefits and relief to the beneficiaries while reducing government’s cost of transfer and monitoring. Once the benefits starts to accrue to the masses, those who remain unbanked shall start looking to enter the formal financial sector.
1. Anna Hazare ready to campaign for Mamata Banerjee
Social activist Anna Hazare on Monday said he would campaign for Trinamool Congress in the Lok Sabha elections if West Bengal Chief Minister Mamata Banerjee agrees to work on a 17-point nationalist programme suggested by him.
“I wrote a letter to every party asking them whether they are ready to work on 17 issues that India is facing today. No political party is thinking about changing the economic system. Only Mamata Banerjee agreed to implement those 17 agendas if voted to power. I will campaign for her party if she commits to these issues in written,” he said. Hazare said he would meet Mamata on Tuesday to discuss the 17-point agenda.
“We will meet tomorrow to discuss how to go about the 17-point programme in detail,” he said. The Gandhian activist refused to comment on erstwhile co-campaigner Arvind Kejriwal’s stand on corruption but added that the former Delhi Chief Minister should present proper proof before calling anyone corrupt. “What can I say about him? It is his personal opinion. But one must provide concrete evidence before releasing a list of corrupt people otherwise it is useless,” he said.
2. Nirbhaya Fund gets additional Rs 1,000 crore in budget
Finance Minister P Chidambaram on Monday allocated an additional Rs 1,000 crore to the Nirbhaya Fund for the safety and empowerment of women.
“In order to make it clear that the (Nirbhaya) fund will be a prominent fund, I intend to declare the grant of Rs 1,000 crore as non-lapsable and in order to support more proposals, I propose to contribute to the fund another Rs 1,000 crore next year,” Chidambarams said while presenting the interim budget in Parliament.
In January, the Cabinet Committee on Economic Affairs approved a Rs 1,405-crore project to track and monitor public transport and provide alarm buttons for alerting authorities.
The government set a deadline of February 20, 2014, for public transport vehicles running in major cities with a population of over 10 lakh to install GPS devices.
3. Brendon McCullum becomes the first cricketer of New Zealand to score a triple century (302) in Test cricket.
He achieved this feat against India in the 2nd test of the bilateral series.
4. Tamil Nadu transport department creates Guinness world record for organising the largest blood donation camp.
The camp saw 53,129 volunteers donating a total of 18439 litres of blood. It was organized to Celebrate CM Jayalalithaa’s birthday. The previous record was held by a camp organized in Haryana where 43732 people had volunteered to donate blood in 2010.
5. Abdul Basit is to replace Salman Bashir as the new High Commissioner of Pakistan to India.
6. Rakesh Maria appointed as new Police Commissioner of Mumbai
The Mumbai Police on Saturday got a new police commissioner. Senior IPS officer Rakesh Maria, who was the head of the Maharashtra Anti Terrorism Squad was appointed as Mumbai Police Commissioner on Saturday.
Rakesh Maria, who belongs to the 1981 batch of the Indian Police Service, played a key role in arresting most of the accused in the 1993 Mumbai serial blasts.
He has headed probes into 1993 Mumbai blasts and 26/11 attacks on the city. The decision to appoint Maria was taken after a high-level meeting in Mumbai chaired by Chief Minister Prithviraj Chavan and attended by Home Minister RR Patil.
7. India to host its maiden World Bridge Championship both for men (Bermuda Bowl) and women (Venice Cup) in October 2015.
The biennial event is the biggest event of card games in the world.
8. Google purchases Israeli security start-up SlickLogin – which has developed a sound based password alternative.
9. Tendulkar, Sehwag nominated for ‘Cricketer of the Generation’ award
Indian batting icon Sachin Tendulkar and Virender Sehwag will be amongst the nominees for the ‘ESPNcricinfo@20 Cricketer of the Generation’ award, with the cricket news website on Monday announcing two more categories to its seventh annual awards.
10. Matteo Renzi nominated to become Italy’s youngest PM
Italy’s Matteo Renzi was on Monday nominated to be the European Union’s youngest prime minister and immediately outlined an ambitious reform plan, promising “energy, enthusiasm and commitment” to revitalise the eurozone’s third largest economy.
11. Pakistan militant Maulana Masood Azhar resurfaces, ignites fears of attacks
Maulana Masood Azhar, the Pakistani Islamic hardliner blamed for an attack on India’s parliament that brought the nuclear rivals to the brink of war has resurfaced after years in seclusion, setting off alarm bells in New Delhi.
Twice since the end of December, authorities have issued an airport security alert, warning of an attempt by members of a Pakistan-based militant group called Jaish-e-Mohammad, or Army of Muhammad, to hijack a plane, with smaller airfields most at risk. Officials have said the alerts followed reports of increased activity by Masood Azhar, the leader of the outlawed militant group. Azhar was named by a court as the prime suspect in a 2001 attack on parliament aimed at taking top political leaders hostage.
Fifteen people were killed, most of them security guards as well as the five men who stormed the complex. Tensions between the old enemies spiralled after the attack and up to a million troops were mobilised on both sides of the volatile border.
Pakistan refused to hand over Azhar to India. The portly and bearded cleric has remained mostly confined to a compound in his home city of Bhawalpur in Pakistan’s Punjab province for years, but three weeks ago, he addressed supporters and said the time had come to resume jihad, or holy war, against India.
Presenting the Interim Rail Budget 2014 in Parliament, Union Railway Minister Mallikarjun Kharge announced that 17 new premium trains and 38 express trains would be introduced.
The Railway Minister has however kept both the passenger as well as the freight fares unchanged.
Mallikarjun Kharge is the second Railway Minister from Congress Party in the 10-year UPA regime to be presenting a Railway Budget, although interim. Earlier, under UPA-I regime Lalu Prasad from RJD had presented vote-on-account (interim budget) in 2009.
No increase in rail fare and freight has been proposed in the Interim Rail Budget for 2014-15. The Minister announced that there will be no more unmanned crossings. A Rail Tariff Authority has also been announced. A number of measures for safety and security of passengers like portable fire-extinguishers in coaches and induction-based cooking in pantry car have been proposed in the Budget.
United Bank of India (UBI) to suspend bank loan facility
Kolkata headquartered public sector lender United Bank of India (UBI)United-Bank-of-India-Logo will soon have the dubious distinction of becoming a bank that doesn’t give loans.
It has suspended all lending activity for an indefinite period, barring a few exceptions such as crop loans, as it’s crippled with 10% bad loans, net losses for two straight quarters and a slump in capital adequacy. The ratio of bad loans to total lending is the worst in the industry.
The bank’s tier 1 capital has fallen below 6%, which is the stipulated regulatory requirement, prompting the lending halt, bank officials said. They said that only agricultural loans, loans against deposits and staff loans that carry very low risk will be given for the time being until further notice.
The lender, already the subject of a Reserve Bank of India (RBI) investigation into dubious lending practices, is expected to issue a formal circular on the loan stoppage soon.
Sikkim become the first state in India with 100% sanitation coverage
In a country ranked poorly on the health and environment front, Sikkim has done remarkably well to become India’s first state with 100 percent sanitation coverage, according to a report of the drinking water and sanitation ministry.
Sikkim, one of the eight northeastern states nestled prettily in the eastern Himalayas, ranked first among the 28 states and seven union territories in terms of sanitation coverage for both urban and rural areas in households, schools, sanitary complexes and Aanganwadi centres. With 610,577 residents (2011 census), Sikkim is India’s least populated and second smallest state in area after Goa.