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Current Affairs- India(Economy)

Current Affairs-Indian(Economy)

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Current Affairs- India(Economy)


1 SEBI allows trading of ETFs in SLB segment
The Securities and Exchange Board of India (SEBI), allowed liquid Index Exchange Traded Funds (ETFs) eligible for trading in the Securities Lending and Borrowing (SLB) segment. Earlier, SEBI had allowed only securities traded in the Future & Options (F&O) segment for lending and borrowing of securities. Securities lending is a loan of securities by a lender to a borrower for an agreed period. The lender earns lending free on securities lying idle, and the objective of the lender is to maximize returns on the portfolio. ETF shall be deemed liquid provided the Index ETF has traded on at least 80% of the days over the past six months and its impact cost over the past six months is less than or equal to 1%. Further, SEBI has introduced a roll over facility where in the lender, who is due to receive securities in the pay out of an SLB session, may extend the period of lending and similarly a borrower, who has to return borrowed securities in the pay in of an SLB session, may through the same SLB session, extend the period of borrowing. Roll over shall be available for three months, that is, the original contract plus two roll over contracts. SEBI, however said that netting between borrower and lend position would not be permitted.

1.1 Exchange Traded Funds


An exchange traded fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as a stock index or bond index. ETFs may be attractive investments because of their low costs, tax efficiency, and stock like features. ETFs are the most popular type of exchange traded product.

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Current Affairs- India(Economy)


2 Eurozone in deep downturn but China US tick up
The Eurozone economy is on course for its deepest decline since early 2009, while Chinese manufacturing sector expanded for the first time in 13 months. The US index showed manufacturing sector growing at its quickest peace in five months. The latest purchasing managers indexes (PMIs), which survey thousands of companies all over the world, at least suggested the global economic slowdown is not getting worse, despite the prolonged downturn in Europe. While factory data in the Eurozone also surpassed expectations, there was a worrying decline in its services sector, comprising the banks, hotels and restaurants that make up most of its economy. The Eurozones periphery, countries such as Spain, Portugal and Greece, has labored under severe austerity policies that have deepened their recessions and sparked popular unrest.

3 Government extends Navratna status to RINL by one year


The Government of India has approved extension of the Navratna status of Rashtriya Ispat Nigam Limited; the corporate entity of the Visakhapatnam Steel Plants would be extended till November 2013. The company was accorded the status on November 16, 2010 with the condition that it would be listed on the stock market within two years. However, due to poor market conditions, the company deferred its initial public offering (IPO) and was on the verge of losing its status. The announcement by the Government gives it a breather.

3.1 What is an IPO?


An initial public offering, or IPO is the first sale of stock by a company to public. A company can raise money by issuing either debt or equity. If the company has never issued equity to the public, its known as an IPO.

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Current Affairs- India(Economy)


4 Eurozone and IMF secure deal on Greek debt
The 17 Eurozone Union nations that use the euro have stuck an agreement with the International Monetary Fund on a program to reduce Greek and put Athens on the way to get the next installment of its much needed bailout on a program to reduce Greek debt and put Athens on the way to get the next installment of its much needed bailout loans. This was the third time in the last two weeks that finance ministers from the Eurozones had tried to strike a deal on the next installment of bailout money some 44.6 billon ($57.8 billion). Greece is predicted to enter its sixth year of recession shortly and has a quarter of its workforce out a job, and there had been fears it might to be forced to drop out of the Eurozone, destabilizing other countries in the process. The main aim of the bailout program is to right Greeces econo my and get it to a point where it can independent raise money on the debt markets. The agreement includes:

A plan to reduce Greeces debt level to 124% of its gross domestic product by 2020 and below 110% by 2022. The IMF had originally insisted on a debt to GDP ratio of 120% by 2020. Cut of 100 basis points on the interest rate charged to Greece by other Eurozone member states excluding those that are also receiving bailouts. 15 year extension of the maturities of loans from other countries and the Eurozones bailout found, the European Financial Stability Facility, and a deferral of interest payments by Greece on EFSF loans by 10 years.

5 SAT rejects Sahara appeal against SEBI


The Securities Appellate Tribunal (SAT) on 29 Nov, rejected an appeal by the Sahara Group companies to accept pay orders of Rs. 5,120 crore towards the liability of the two companies to SEBI.

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Current Affairs- India(Economy)


The Sahara Group appealed to the Tribunal to direct the Registrar, SAT to accept custody of the amount to be paid by them to SEBI by November 30, being the total amount payable towards the repayment to investors of optionally fully convertible debentures (OFCD) issued by the Sahara group companies, as per the direction of Supreme Court. The appeal is filed by Sahara India Real Estate Corporation and Sahara Housing Investment Corporation, impugning the letter date November 1, issued by SEBI to the two companies asking them to furnish details of all the bank accounts and properties. These companies have failed to furnish the documents to SEBI within the stipulated time and, thereby, violated the direction of the Supreme Court, SAT observed.

5.1 SAHARA Case in brief


The Supreme Court has directed its group companies, Sahara India Real Estate Corporation Ltd. and the Sahara Housing Investment Corporation Ltd. to refund over 24,400 crore collected from 2.21 crore depositors through an instrument known as optional fully convertible debentures. The companies should refund the amounts collected after issue of Red Herring Prospectus (RHPs) dated March 13, 2008 (17,400 crore) and October 16, 2009 (Over 7,000 crore) along with 15% interest to the Securities and Exchange Board of India from the date of receipt of the subscription amount till the date of repayment, within three months, which should be deposited in a nationalized bank bearing maximum rate of interest.

6 Sahara moves SC against SAT order


The Sahara Group moved to Supreme Court against the order of the Securities Appellate Tribunal (SAT) dismissing its appeal against market regulator SEBI in a case involving refund of about 24,000 crore with interest to about three crore investors. In their appeal before the SAT, two Sahara Group firms had sought the Tribunals intervention in refund of investors money and had accused the Securities and exchange

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Current Affairs- India(Economy)


board of India of wrongly charging them of non-compliance with a Supreme Court order in that regard.

6.1 Securities Appellate Tribunal (SAT)


Securities Appellate is statutory body established under the provisions of the Securities and Exchange Board of India Act, 1992 to hear and dispose of appeals against orders passed by the Securities and Exchange Board of India or by an adjudicating officer under the Act and to exercise jurisdiction, powers and authority conferred on the Tribunal by or under this Act or any other law for the time being in force. The Securities Appellate Tribunal has only one bench which sits at Mumbai.

7 BSE launches carbon based thematic Index


The Bombay Stock Exchange (BSE) launched BSE Carbonex, in collaboration with UK government, the first carbon based thematic index in the country, which takes a strategic view of organizational commitment to climate change mitigation. This index has been launched with the aim of creating a benchmark and increasing awareness about the risks posed by climate change. It will enable investors to track performance of the constituent companies of BSE 100 index regarding them to the benchmark based on their performance in the assessment process. In every industry, companies that achieve the strongest assessment scores are favored at the expense of those achieving poor results.

7.1 GRP growth dips to 5.3% in Q2


In keeping with market expectations and factored in by stock investors, GDP growth dipped to 5.3% in the second quarter (July-September) of 2012-2013 from 6.7% in the same quarter during the previous fiscal, mainly owing dismal performance by the farm and manufacturing sectors. With the economic growth during the three month period slipping further from 5.5% in the first quarter of the current fiscal, the scale down in annual growth projections by

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Current Affairs- India(Economy)


various global agencies and think tanks for the entire year now appears to be more realistic and may turn out to be the lowest pace of GDP expansion in a decade. While the poor show by the manufacturing sector has been impacting industrial growth severely for the last few months, the pull down in agriculture during the quarter has led to a much lower GDP growth at 5.4% during the first half (April-September) of 20122013 as compared to a comparative robust expansion of 7.3% witnessed in the same period a year ago. Despite the slippage, the silver lining in the GDP growth data is that the slowdown appears to be bottoming out as the numbers reveals a slight rise in gross capital formation, showing signs of recovery during the second half of the fiscal year.

8 Tribunal dismisses Sahara group appeal against SEBI


The Securities Appellate Tribunal has dismissed an appeal by two Sahara group firms against SEBI in the high profile case involving refund of about Rs. 24,000 crore with interest to about three crore investors. Sahara firms in their appeal had sought the tribunals intervention in refund of investors money and had accused the market regulator SEBI of wrongly charging them of noncompliance with a Supreme Court order in this regard. The tribunal, however, said that any further direction in the case can be sought for an granted by the Supreme Court alone and dismissed the appeal. The apex court had asked Sahara India Real Estate Corporation Ltd. and Sahara Housing Investment Corporation Ltd. to refund an estimated Rs. 24,000 crore with an annual interest of 15 per cent, while SEBI was directed to facilitate the refund of his money to about three core bondholders of the two firms.

9 Your intention is shaky, Supreme Court tells Sahara


The Supreme Court, while pulling up Sahara group for the delay in refunding the deposits to its investors, asked it to spell out whether it would be in a position to refund the entire amount of Rs. 24,000 crores with interest within a week.
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Current Affairs- India(Economy)


The Sahara real estate companies have challenged the Securities Appellate Tribunal (SAT) order rejecting their plea to direct its registrar accept a pay order of Rs. 5,120 crore that it had to deposit to SEBI towards the payment of investors deposit by November 30.

10 FIPB not to stay for FDI in domestic pharma units


The government decided that all foreign investments in existing domestic pharma firms should be allowed only after clearance by the Foreign Investment Promotion Board (FIPB), amid mounting concerns over availability of affordable essential drugs in the wake of multinationals acquiring local companies. Every proposal for foreign investment in existing Indian pharmaceutical companies will have to get approval from FIPB till the time the competition Act is amended. Also, any foreign company acquiring an Indian firm, which had been producing essential medicines, would have continue to get FIPB approval till Competition Commission of India will be empowered to examine such deals. Although the amendment to the Competition Act, 2002, was approved by the Cabinet, the government is checking the legality of inserting new sectoral specific clauses in the Act so that the CCI could direct foreign firms to produce specific quantity of essential medicines after acquiring an Indian company.

11 SC orders Sahara to repay deposits in 2 installments


The Supreme Court gave a breather to the Sahara group by directing it to deposit Rs. 5,120 crore immediately and pay its investors in two installments, the first installment of Rs. 10,000 crore in the first week of January 2013 and the balance amount, including interest, in the first week of January 2013 and the balance amount, including interest, in the first week of February. The Bench passed its order after Sahara group requested for more time to repay the amount to the investors, money they had collected through optionally fully convertible debentures (OFCD).
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Current Affairs- India(Economy)


On August 31, a Bench had directed the group to deposit Rs. 17,400 crore with 15 per cen interest with the Securities and Exchange Board of India (SEBI) within three months, which the group did not do. The Bench made it clear that if the appellants failed to pay the first installment by January 2013, SEBI could seize their account and recover money in terms of August 31 order. The Bench directed Sahara to submit all the relevant documents to SEBI within 15 days.

12 Gross direct tax collections up 7.14%


Gross direct tax collections rose by 7.14% in April-November to 3.25 lakh crore from 3.04 lakh crore in the corresponding period last year. Corporate tax collections during the period grew by 3% at 2.05 lakh crore against 1.99 lakh crore. Personal income tax collections, however, was up 14.94% at 1.19 lakh crore against 1.04 lakh crore. Wealth tax collections recorded a growth of 27.10% at 619 crore against 487 crore. Securities Transaction Tax collections declined by 12.83% to 2,914 crore in the April November period, from 3,343 crore in the corresponding period last year. Net direct tax collections were up 15.04% at 2.71 lakh crore against 2.35 lakh core in the same period last year, primarily on account of lower refunds.

13 Bharti-Walmart FEMA violation under ED scanner


The government told Parliament that investigation into alleged FEMA violations in the Bharti-Walmart joint venture has been referred to the Enforcement Directorate. Online services provider Flipkart is also under the ED scanner. Flipkart allegedly flouted FDI rules which allow e-commerce companies with foreign investment to carry out only business to business (B2B) transactions, and not business to consumer (B2C) transactions by creating complex structures that may not be permissible.
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Current Affairs- India(Economy)


14 NBFCs may need prior RBI nod for ownership change
According to RBIs new draft guidelines Non-banking financial companies (NBFC) would need RBIs prior approval before making changes in their ownership control. The draft guidelines are based on the Usha Thorat Committee report. According to the guidelines, it is mandatory for all deposit taking NBFCs to obtain credit rating. Further the appointment of CEOs and NBFCs with asset size of Rs, 1,000 crore and above would now require the approval of RBI. The draft norms said existing unrated NBFCs-D will be given one year to get rated, thereafter, they, till they get themselves rated they would not be allowed to accept any fresh deposits or renew existing deposits. On change in control or transfer a shareholding the draft said that all registered NBFCs should take prior approval from the RBI where there is a change in control and increase of shareholding to extent of 25 per cent by individuals or groups, directly or indirectly. Regarding non-performing assets (NPAs), the RBI has proposed that asset classification and provisioning norms should be made similar to that of banks for all registered NBFCs irrespective of the size. At present, the period of classifying loans into NPAs in case of NBFCs is higher at 180/360 days compared to 90 days for banks. The RBI has sought comments from the stakeholders on the draft norms by January 10.

15 Reserve Bank tightens norms for issue of debit cards


The Reserve Bank of India(RBI) on 11 dec 2012 stipulated that debit cards would be issues to customers having Savings Bank and Current Accounts but not to cash credit or loan account holders. Banks may issue only online debit cards, including co-branded debit cards where there is an immediate debit to the customers account and where straight processing is involved, RBI said.

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Current Affairs- India(Economy)


Going forward Banks are not permitted to issue offline debit cards. Banks which are now issuing offline debit cards may conduct a review of their offline debit card operations and discontinue operations of such cards within a period of six months. Banks were also to ensure that customers were duly informed regarding switching over to online debit cards. Each bank shall make available to the cardholders in writing, a set of confractual terms and conditions governing the issue and use of such a card. These terms shall maintain a fair balance between the interests of the parties concerned and shall be expressed clearly. With a view to reducing the instances of misuse of lost/stolen cards, the apex bank asked banks to issue cards with photograph of the cardholder or any other advanced methods that may evolve from time to time. Banks should undertake review of their operations/issue of debit cards on half-yearly basis. The review would include, inter-alia, card usage analysis, including cards not used for long durations due to their inherent risks.

16 SEBI initiative to reduce risk on stock exchanges


The Securities and Exchange Board of India (SEBI) has asked stock exchanges to ensure stock brokers are mandatorily put in risk reduction mode when 90% of the stock brokers collateral available for adjustment against margins gets utilized on account of trades that fall under a margin system. SEBI further said that all new orders should be checked for sufficiency of margins and non margined orders should not be accepted from the stock broker in risk reduction mode. The stock broker would be moved back to the normal risk management mode as and when the collateral of the stock broker was lower than 90% utilization level. The regulator said that it had been decided to prescribe a framework of dynamic trade based price checks to prevent aberrant orders or uncontrolled trades. SEBI has also decided to tighten the initial price threshold of the dynamic price bands.
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Current Affairs- India(Economy)


Stock exchanges shall set the dynamic price bands at 10% of the previous closing price for stocks on while derivatives products are available, stocks included in indices on which derivates products are available, index futures and stock futures.

17 RBI extends deadline of new cheque standard


The Reserve Bank of India (RBI) has extended deadline given to migrate to new look cheque (CTS-2010 Standard cheques) with more security and standardized features, to March 31, 2013. However, the RBI said that the residual non CTS-2010 Standard cheques that are presented in the clearing system beyond this extended period would continue to be accepted for the clearing but would be cleared at less frequency intervals. Banks were in the process of issuing new look cheques to all its customers by December 31, 2012. Cheque Truncation System (CTS)-2010 standard is a set of benchmarks towards achieving standardization of cheques. Adherence to CTS-2010 Standards has inherent advantages as the security features in cheque helps the presenting banks to identify the genuineness of the drawee banks instrument while handling them in the image based scenario.

18 Inflation dips to 10 month low 7.24%


Inflation has dropped to a 10 month low of 7.24% prompting the government to exude optimism with Finance Minister P. Chidambaram saying it could decline further in the coming months. The declining trend might trigger an interest rate cut by the RBI to boost economic growth which fell to 5.4% in the first half of the current fiscal from 7.3% in the year ago period. The decline in inflation during November from 7.45% a month ago and 9.46% in the corresponding month a year ago can be attributed to falling prices of certain vegetables.

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Current Affairs- India(Economy)


Vegetable prices decreased by 1.19% in November this year as compared to surge of 10.68% in same month a year ago. However, prices of some food items such as potato, wheat, cereals, rice, pulses, edible oil and sugar went by during the period. Food inflation, as a category in the WPI, rose to 8.5% during the month from 8.32% a years ago. Though vegetables, in general registered a decline, potato and onion prices, however, shop up by 72.20% and 17% respectively year on year in November this year. This is compared to a decline of 9.31% and 35.15% in the same period last year. Wheat turned expensive by 23.19% in November from a decline of 4.86% in the same month a year ago. Cereals became dearer by 15.85% from a rise of 2.15% in the same month last year. Pulses and eggs, meat and fish became costlier by 19.10% and 14.19% respectively in November.

19 Government to speed up PSU stake sale process


Prime Minister Manmohan Singh said the government will speed up the stake sale process in public sector enterprises to help revive equity markets. So far this fiscal, the government has raised over 6,900 crore by way of divesting stake in PSUs. The government plans to raise Rs. 30,000 crore in the current fiscal by way of selling minority stakes in PSUs. Revenue realization from disinvestment in essential for the government to restrict the fiscal deficit to 5.3 per cent of GDP in the current fiscal. The Centres fiscal deficit touched a high of 5.9 per cent in the previous fiscal.

20 Golden Worry: Record Gold Import has had impact on CAD


To restrict the practice of investing on Gold, the government is planning a string of measures, some of which have already been implemented.
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Current Affairs- India(Economy)


The import duty on gold has already been increased. The other plans include creating gold deposits, accumulation plans and gold linked accounts. This according to the government will reduce the craze for having to investment in physical gold rather they will be getting the same benefits but in the form of financial instruments. IMPACT: the impact of doing this is it not only reduces the import bill, which further reduces the CAD, but also the demand for gold as an investment option will reduce.

21 RBI keeps rates unchanged


The Reserve Bank of India (RBI) in its third mid quarter review on 18 December has kept the indicative policy rates and Cash Reserve Ratio (CRR) unchanged. The central bank said that the recent policy initiatives by the government and further reforms should help boost business sentiment and improve the investment climate. The RBI kept the indicative repo rate unchanged at 8% and Cash Reserve Ratio (CRR) unchanged at 4.25%. The RBI said that gross domestic product (GDP) growth in the second quarter of 2012-13 at 5.3% was marginally lower than 5.5% in the first quarter. However, it said there were some indications of a modest firming up of activity in the fourth quarter starting January. Industrial activity rose sharply in October but this is, in large part, due to a low base and festival related demand which propelled the growth of both consumer durables and non-durables into double digits. Capital goods production recorded a growth of 7.5% after 13 successive months of decline. In the farm sector, Rabi sowing coverage is expanding steadily, improving the prospects of agricultural growth.

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22 Lok Sabha clears Banking bill minus controversial clauses
The Banking Amendment Bill got approval of the Lok Sabha after the government dropped the controversial provision on 18 December 2012. The controversial provisions in the bill were: Banks to trade in futures Banking sector to be kept outside the purview of Competition Commission The Bill, along with the proposed legislations on pension and insurance, was one of the five key reform measures on the governments agenda during the current session of Parliament. On the proposal to allow banks to participate in the commodity futures trading, Finance Minister said, it was based on the recommendations of the Standing Committee on Food and Consumer Affairs and the report of the Reserve Banks working group. As regards other issues, he said, while the RBI would regulate the baking sector, the Competition Commission of India (CCI) would look into competition practices in the banking sector. The Banking Bill also seeks to raise the voting rights of investors in private sector banks to 26% from 10%. It also allows the RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in PSBs to 10% from 1%. Finance Minister said, Justice B.N. Srikrishna B.N. Committee had given its draft report and once the final report came the government would come out with a comprehensive banking law.

23 RBI to speed up process for issuing new banking licenses


A day after the Lok Sabha passed the Banking Laws (Amendment) Bill: RBI Deputy Governor K.C. Chakrabarty said the process for issuing new banking licenses would be expedited. Among other things, the Bill seeks to raise the voting rights of retail/minority investors in private sector banks to 26 per cent from 10 per cent.
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Current Affairs- India(Economy)


The Bill also allows the RBI to supersede boards of private sector banks and increase the cap on voting rights of private investors in public sector banks to 10 per cent from the present one per cent. Changes brought by the new Bill will enable the RBI to issue new banking licenses.

24 UBS fined $1.5 billion


After Barclays, UBS has now been fined $1.5 billion on charges of manipulating bank Libor rates. The penalty includes $.1.2 billion to US Department of Justice and the Commodity Futures Trading Commission and also $300 million to the Britains financial services authority. Authorities pointed to two types of manipulation of Libor and Euribor attempts by its own employees to benefit the banks own trading positions and attempts to manipulate the benchmark rates to enhance public perception of the creditworthiness of the bank, over a period between 2005 and 2010.

24.1 What is LIBOR?


LIBOR or the London Inter-Bank Offered Rate is the average interest rate estimated by leading banks in London that they would be charged if borro wing from other banks. Incidentally, it is the rate the Indian banks also use to decide the Inter-Banks call rate.

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