DAILY GK UPDATE 2ND AUGUST

1.    Banking on Inclusion !

The southern States race past others in financial inclusion, finds a CRISIL report….

i. With nearly twice of the all-India average in credit penetration, the four southern States are presently leading the financial inclusion drive in the country.

ii. A new index on financial inclusion released by ratings firm CRISIL (Credit Rating Information Services of India Limited) reveals that the number of loan accounts per lakh of population in the southern States stands at 17,142.

iii. However, this healthy figure can be easily offset by the under-penetration of formal banking facilities in most parts of the country just one in two Indians has a savings account, and only one in seven Indians have access to banking credit!

iv. Moreover, the bottom 50 scoring districts have just two per cent of the country’s bank branches.

v. The index measures financial inclusion on a scale of 1 to 100, with 100signalling that an entire population has access to banking services.

vi. The report  states that developed states like Gujarat and Maharashtra lag behind the national average of 40.1 when it comes to financial inclusion; ultimately resulting in a loss to the Indian GDP of nearly one per cent due to lack of financial inclusion.

vii. The southern region has raced ahead across all three dimensions of financial inclusion — branch penetration, deposit penetration, and credit penetration

viii. CRISIL used bank branch, credit and deposit penetration (per lakh population) to assign scores to each district and then arrived at a score for every State and Union Territory.

Why Southern States are leading the financial inclusion drive in the country?

i. “The governments of the southern States ensured financial inclusion through adopting e-governance and electronic transfer ofwelfare payments.

ii. Higher levels of literacy in these States have also led to easier adoption and better awareness about banking services.

iii. Higher number of bank branches has played its role in increasing the reach,” explains Mujahid Ahsan, Vice President (Products), FINO PayTech Limited.

FINO PayTech is an implementing agency that works with banking and microfinance institutions to provide the last-mile connectivity through Banking Correspondents (BC).

NOTE: i. According to the CRISIL report, six of the 10 most inclusive States and Union Territories are in the south.

ii. Puducherry is on the top with a score of 79.6. Chandigarh in the north and Goa in the west are also in the top 10.

iii. The bottom five includes Arunachal Pradesh, Chhattisgarh, Bihar, Nagaland, and Manipur, the lowest with a rating of 16.6.

iv. “Financial inclusion… is not just about opening of saving bank accounts; it includes creation of awareness about financial products, and offering of advice on money management and debt counselling,

2.    RBI tightens hedging norms for FIIs

i. In yet another step to rescue the battered rupee, the Reserve Bank of India, on Thursday, tightened hedging rules by making it mandatory for foreign institutional investors (FIIs) to obtain consent of holders of participatory note (P-Note) and derivative instruments before hedging. 

ii. FIIs must have a mandate from the P-Note or Offshore Derivative Instrument (ODI) holder for the purpose (of hedging), the RBI said in a notification.

iii. “Further, the bank is expected to verify such mandates, in cases where this is rendered difficult, they may obtain a declaration from the FII regarding the nature or structure of the PN/ODI establishing the need for a hedge operation and that such operations are being undertaken against specific mandates obtained from their clients.

Participatory Notes:

i. Participatory Notes commonly known as P-Notes or PNs are instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India – SEBI.

ii. Participatory notes are instruments used for making investments in the stock markets.

Need:

i. Any entity investing in participatory notes is not required to register with SEBI (Securities and Exchange Board of India), whereas all FIIs have to compulsorily get registered. It enables large hedge funds to carry out their operations without disclosing their identity.

ii. Ease of Trading: Trading through participatory notes is easy because participatory notes are like contract notes transferable by endorsement and delivery.

iii. Tax Saving: Some of the entities route their investment through participatory notes to take advantage of the tax laws of certain preferred countries.

iv. Money Laundering: PNs are becoming a favourite with a host of Indian money launderers who use them to first take funds out of country through hawala and then get it back using PNs.

3.    Govt decides to keep pol parties out of RTI’s ambit

i. Providing immunity to political parties from Right to Information Act (RTI), the Cabinet gave its nod to amend the transparency law to keep them out of its ambit by declaring that they are not public authorities.

ii. The Cabinet decision came nearly two months after the Central Information Commission's order of bringing six national political parties--Congress, BJP, NCP, CPI-M, CPI and BSP--under the RTI Act.

iii. The decision to amend the RTI Act was taken during a Cabinet meeting chaired by Prime Minister Manmohan Singh in New Delhi on Thursday

iv. The amendments state that declaring political parties as public authorities under the RTI would "hamper their smooth internal functioning since it will encourage political rivals to file RTI applications with malicious intentions".

v. They maintain that the Representation of the People Act and the Income Tax Act provide sufficient transparency regarding financial aspects of political parties, it is learnt.

vi. Under Section 2 of the RTI Act, the definition of public authority in the proposed amendment will make it clear that "it shall not include any political party registered under the Representation of the Peoples Act", t

4.    Dadra and Nagar Haveli Celebrated Its 60th Liberation Day

i. Dadra and Nagar Haveli celebrated its 60th Liberation Day on 2 August 2013.

ii. The Union Territory of Dadra and Nagar Haveli were liberated from the Portuguese rule.

About Dadra and Nagar Haveli

i. Dadra and Nagar Haveli, the Union Territory of India, is situated between or surrounded by Gujarat and Maharashtra.

ii. 500 sq kilometer small area that is mostly under forest cover is celebrated the 60th Liberation Day, the day on which it was freed from the Portuguese rule in 1954.

iii. Indian Nationalist volunteers had librated Dadra and Nagar Havel and it became centrally administered Union territory from 11 August 1961.     

5.    Govt makes investment in retail attractive, raises FDI caps

i. The Union Government of India on 1 August 2013 relaxed the norms for Foreign Direct Investment (FDI) in the multi-brand retail.

ii. The government also raised the FDI caps in different sectors increasing the cap in telecom sector to 100 percent.

iii. The decision was taken to attract more investments in retail and provide more clarity and space to the investors.

iv. As per the decision made on the FDI, the government has made it mandatory for the multi-brand retailers like Tesco and Walmart to source 30 percent of their products from the small and medium enterprises of India only at the time of starting the business. 

v. The Government also decided to put FDI up to 49 percent in the single retail-brand under the automatic route, beyond which the investments would be routed through Foreign Investment Promotion Board (FIPB).

vi. No decision was made on FDI cap in defence sector as it remained unchanged at 26 percent.

6.    FDI to increase in Print Media from 26 Percent to 49 Percent

i. The executive committee of the Indian Newspaper Society (INS) on 2 August 2013 approved a proposal to increase Foreign Direct Investment (FDI) from 26 percent to 49 percent in print media.

ii. The INS will recommend of 49 percent FDI in print through the Foreign Investment Promotion Board (FIPB) route to the Information and Broadcasting Ministry.

iii. In the last few decades, the print media business in India has grown exponentially and the prospects of future growth in the upcoming years appear bright.

iv. To maintain this growth, the print media companies require an inflow of funds to expand and reach every corner of India.

v. The government will now require the proposal of the Press Council of India to give its go-ahead. 

7.    Former Maharashtra Minister Chatrapal Anand passes away

i. Former Maharashtra Minister and leading figure in co-operative movement in Vidarbha region, Chatrapal Anand alias Babasaheb Kedar, passed away in wee hours today at a private hospital after a prolonged illness. 

ii. He was 85. As per the information received from the family sources, the last rites on his mortal remains would be performed with full state honours tomorrow

iii. Babasaheb Kedar was Minister of State for Rural Development in the then Chief Minister Sudhakar Naik’s Ministry during the period 1990-92.

iv. Popularly known as 'Sahakar Maharshi', he played a pioneering role in the development of various cooperative enterprises and educational institutions in Nagpur district as well as other parts of the region and worked for the betterment of the farming community all his life.

8.    PM dedicates two projects of BHEL

i. Prime Minister Manmohan Singh on Friday dedicated two projects of PSU BHEL in Thirumayam at Puthukottai district .

ii. Dr. Singh dedicated BHEL's Rs 1,000 crore High Pressure Boiler Plant Unit-II, a greenfield initiative, and the Rs 300 crore power plant piping unit.

iii. BHEL has invested Rs 350 crore for the power piping plant, Rs 100 crore for civil works and Rs 250 crore for machinery.

iv. BHEL Tiruchirapalli’s second unit has an installed capacity of 8 lakh metric ton and manufacturing power equipment of 20,000 Mega Watt annual capacity.

v. The plant has been set up in one lakh 20,000 square metres at a cost of Rs thousand crore.

vi. The BHEL Tirumayam plant has been set up in 40 acres of land at a cost of Rs 300 crore, the installed capacity of the plant is 80,000 Metric Tonnes of piping equipment at an annual turnover of Rs 2500 crore.

vii. Prime Minister said that one lakh mega watt power was targeted in 12th Five year plan and lauded BHEL’s initiatives to manufacture more power equipment.

9.    Govt clears interest subvention scheme for farmers

i. To ensure availability of loans at affordable rates for farmers, the government has approved a scheme for providing short-term crop loans at concessional rate of 7 percent, Information and Broadcasting Minister Manish Tewari said here on Friday.

ii. "This scheme has already been extended to crop loans borrowed from private sector scheduled commercial banks in respect of loans given within the service area of the branch concerned

iii. An additional subvention of 3 percent is being provided to those farmers who repay their loans on time, he said, adding, the effective rate of interest for such farmers, thus, will be 4 percent per annum.

iv. The estimated budgetary implication of this scheme for 2013-14 is Rs 15,385 crore

v. Govt. will also provide interest subvention at 7 percent to small and marginal farmers having Kisan Credit Card loans against Negotiable Warehouse Receipts for post harvest, on the same rates as those available for crop loan, for another six months.

vi. The estimated additional budgetary implication of this feature would be Rs 264 crore,.

vii. Banks have been consistently meeting the target set for agricultural credit flow in the past years. For the year 2013-14, the target for agricultural credit flow has been raised to Rs 7 lakh crore from Rs 5.75 lakh crore in the year 2012-13.