No performing asset is one where principal or interest overdue for 90 days. Substandard asset is NPA for >12 months. Doubtful asset is substandard for 12 months. RBI mandates that banks keep some funds aside as insurance for these NPA's and hence banks profits are reduced. Stressed assets are NPA and loans written off.
61% of NPA are from the five sectors: Textile, Steel, Aviation, Infrastructure and Mining.
Setup in 2016 to professionalize the appointment of public sector bank chief and directors.
Structure:
Functions:
Government of India seeking to consolidate existing laws on bankruptcy into a single framework. The bill received president's assent in May-2016 and is in force.
Features:
Drawbacks:
New loans shall be under M.C.L.R which became effective from 1st April 2016. M.C.L.R makes banks lending rates more responsive to repo rates.
M.C.L.R is dependent on marginal cost of funds and especially by deposit rates and repo rate. Any change in repo rate brings change in marginal cost and so M.C.L.R also has to be changed.
Need for M.C.L.R:
The RBI has reduced the repo rate by 125 bais points i.e. 1.25% but the banks did not fully pass this lower lending rate to borrowers but they reduced the time deposit rates by large margin.
High interest rates meant that the entrepreneurs or consumers couldn't get cheap credit and so the investment of the economy remained low. GDP thus was stagnant.
Reason for banks to not reduce lending rates / Incomplete monetary transmission:
Application to setup payment banks can be made by super market chains, mobile telephone companies, N.B.F.C's, Pre-paid instrument providers like digital wallets, companies, cooperatives controlled by residents.
Small Banks - Concept from Community banks of U.S.A
Application can be made by individuals with 10 years experience in field of banking, microfinance companies, N.B.F.C's.
Wholesale Banks
Custodian Bank
Indradhanush: Key performance indicators to link performance of CEO / MD of PSB with bonus.
Monetary policy framework committee to have 6 members i.e. 3 from RBI [RBI Governor, RBI Deputy governor and RBI executive director] and 3 from Govt of India. The chief shall be RBI governor and decisions shall be made by majority.
A search and selection committee shall be of Cabinet secretary, RBI Governor and Secretary, Dept of Economic Affairs for the three outside members. Three members from outside RBI shall be experts in field of banking, economics, monetary policy.
If CRR / SLR not maintained then penalty of bank rate + [3 - 5] %
RBI has set the target of 75% Priority sector lending for Regional rural banks. They have to furnish data to NABARD. The PSL target for foreign banks with <20 branches to be increased to 40% from current 32%.
National Payments corporation of India created the Unified Payment Interface from 1-4-2016.
Public sector banks have 70% of India’s ATM’s. Maharashtra and Tamil Nadu topped the list in number of ATM’s. There are 2.15 lakh ATM’s in India of which 48000 are in these states. Although 69% population is rural it has 45% ATMs compared to urban areas that are 31% of India and have 54% of ATM’s.
Q.The term ‘Domestic Content Requirement’ is sometimes seen in the news with reference to (UPSC CSAT 2017)
Developing solar power production in our country
Granting licenses to foreign T.V. channels in our country
Exporting our food products to other countries
Permitting foreign educational institutions to set up their campuses in our country
Ans . A
Q.Consider the following statements:
1. India has ratified the Trade Facilitation Agreement (TFA) of WTO.
2. TFA is a part of WTO’s Bali Ministerial Package of 2013.
3. TFA came into force in January 2016.
Which of the statements given above is/are correct? (UPSC CSAT 2017)
1 and 2 only
1 and 3 only
2 and 3 only
1, 2 and 3
Ans . A
TFA came into force from February 2017
Q.Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and (UPSC CSAT 2017)
European Union
Gulf Cooperation Council
Organization for Economic Cooperation and Development
Shanghai Cooperation Organization
Ans . A
Q.The term ‘Digital Single Market Strategy’ seen in the news refers to (UPSC CSAT 2017)
ASEAN
BRICS
EU
G20
Ans . C
Q. The Fair and Remunerative Price of Sugarcane is approved by the(UPSC CSAT 2015)
Cabinet Committee on Economic Affairs
Commission for Agricultural Costs and Prices
Directorate of Marketing and Inspection, Ministry of Agriculture
Agricultural Produce Marketing Committee
Ans . A
CACP recommends the fair and remunerative prices based on inter-crop price parity, inflation considerations, fair return to farmers and a host of other factors.
It is the cabinet Committee on Economic affairs that finally approves it.
Q.Convertibility of rupee implies: (UPSC CSAT 2015)
being able to convert rupee notes into gold
allowing the value of rupee to be fixed by market forces
freely permitting the conversion of rupee to other currencies and vice versa
developing an international market for currencies in India
Ans . C
Rupee convertibility means the system where any amount of rupee can be converted into any other currency without any question asked about the purpose for which the foreign exchange is to be used.
Non-convertibility can generally be defined with reference to transaction for which foreign exchange cannot be legally purchased (e.g. import of consumer goods etc), or transactions which are controlled and approved on a case by case basis (like regulated imports etc).
A move towards free convertibility implies a reduction in the number / volume of the above types of transaction.
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