General Awareness

2015
For Banking Exams

General Awareness 2015 for all competitive exams (Especially for Banking Exams) Covers
All Important Topics.

By Varun Prakash
Banking Awareness
Join Us on Facebook- www.facebook.com/BankingAwareness689
 Contents
Chapter- 1 ............................................................................ 4
Indian Financial System ................................................... 4
INDIAN FINANCIAL SYSTEM ......................................... 4
FINANCIAL MARKETS ................................................... 4
FINANCIAL INTERMEDIATION...................................... 5
FINANCIAL INSTRUMENTS ........................................... 5
Capital Market Instruments ........................................ 6
Chapter- 2 ............................................................................ 7
Banking Systems .............................................................. 7
HISTORY OF INDIAN BANKING .................................... 7
Structure of Banking Sector in India............................ 8
Scheduled Banks ......................................................... 8
COMMERCIAL BANKS .................................................. 8
COOPERATIVE BANKS .................................................. 8
DEVELOPMENT BANKS ................................................ 9
Export-Import Bank of India (EXIM BANK) .................. 9
The Industrial Development Bank of India .................. 9
National bank For Agriculture and Rural Development
(NABARD) .................................................................. 10
Non-bank financial companies (NBFCs) .................... 10
Microfinance Institutions (MFIs) ............................... 10
Self-Help Groups Or Micro Credit ............................. 10
Reserve Bank of India ................................................ 10
Structure ................................................................... 10
Functions of RBI ........................................................ 11
National Housing Bank (NHB).................................... 12
Small Industries Development Bank of India (SIDBI) . 12
Chapter-3 ........................................................................... 12
Regulatory Bodies .......................................................... 12
Financial Regulatory Bodies ...................................... 12
Securities and Exchange Board of India (SEBI) .......... 12
Foreign Investment Promotion Board ....................... 13
Financial Sector Development Council (FSDC) .......... 13
Major Financial Institutions in India .......................... 13
Insurance Regulatory and Development Authority
(IRDA) ........................................................................ 14
Pension Fund Regulatory and Development Authority
(PFRDA) ..................................................................... 14
Forward Markets Commission (FMC) ........................ 14
Categories of Priority Sector ..................................... 14
Chapter-4 INDIAN ECONOMY CONCEPTS &
UNDERSTANDING BUDGET ................................................ 15
Indian Economy Concepts & Understanding............. 15
Concept of National Income ..................................... 15
Measurement of National Income ............................ 16
New Economic Policy ................................................ 17
Economic Reforms .................................................... 17
RECENT POLICY MEASURES ....................................... 17
SECTORS WITH CAPS ................................................. 17
SECTORS REQUIRING CENTRAL GOVERNMENT
APPROVAL ................................................................. 17
Fiscal Policy ............................................................... 18
Tax System ................................................................ 18
Finance Commission.................................................. 18
Important Taxes Imposed in India............................. 19
BUDGET ..................................................................... 19
Balance Sheet (overview) .......................................... 21
Union Budget 2015-16 .............................................. 21
Union Budget 2014-15 .............................................. 25
Rail Budget 2015-16 .................................................. 31
Rail Budget 2014-15 .................................................. 34
2
Economic Survey 2015 .............................................. 37
Chapter-5 ........................................................................... 38
Banking Terminology ..................................................... 38
Chapter-6 ........................................................................... 64
Banking & Finance Abbreviations .................................. 64
Chapter-7 ........................................................................... 67
International Financial Organisations ............................ 67
International Monetary Fund .................................... 67
International Bank For Reconstruction And
Development (IBRD) – World Bank ........................... 68
International Fund for Agricultural Development
(IFAD) ......................................................................... 70
International Development Association (IDA) ........... 70
India and IDA ............................................................. 71
International Finance Corporation (IFC) .................... 71
General Agreement on Tariffs and Trade (GATT) ...... 71
World Trade Organisation (WTO) .............................. 72
Rounds of GATT ......................................................... 72
United Nations Conference on Trade and
Development (UNCTAD) ............................................ 72
Asian Development Bank (ADB) ................................ 72
Some Important UN Agencies ................................... 73
Chapter-8 ........................................................................... 73
BASEL ............................................................................. 73
BASEL COMMITTEE ON BANKING SUPERVISION (BCBS)
................................................................................... 73
Summary of Proposed Changes ................................ 74
Major highlights of the draft guidelines of RBI ......... 75
Chapter-9 ........................................................................... 75
Banking Facts ................................................................. 75
Facts related to Banking System In India & Finance
Sector ........................................................................ 75
Banking Requirements .............................................. 76
Chapter-10 ......................................................................... 76
2-GA-L10 ........................................................................ 76
List of states and territories ...................................... 76
States ......................................................................... 76
Union territories ........................................................ 77
Chief Ministers and Governors .................................. 77
Lt. Governors & Administrators ..................................... 78
Members of Parliament ................................................. 78
Rajya Sabha.................................................................... 78
Lok Sabha ....................................................................... 78
Chiefs of Armed Forces .................................................. 78
CABINET MINISTERS .................................................. 78
MINISTERS OF STATE ................................................. 79
Heads of Important National & International
Organisation .............................................................. 80
CONSTITUTIONAL OFFICES ........................................ 80
POLITICAL OFFICES .................................................... 80
POLITICAL OFFICIAL ................................................... 80
HEADS OF GOVT APEX WING .................................... 80
HEADS OF FINANCIAL BODIES ................................... 80
BUREAUCRATS ........................................................... 81
DEFENCE AND SECURITY ........................................... 81
Countries and Their Capital & Currency .................... 81
NITI Aayog replacement of Planning Commission of
India ........................................................................... 87
Chapter-11 ......................................................................... 87
Books and Authors ......................................................... 87
Latest Books in News ................................................. 89
Chapter-12 ......................................................................... 90
 Observance .................................................................... 90
Chapter-13 ......................................................................... 91
Important Committees .................................................. 91
Important Committees and their Focus Areas .......... 91
Chapter-14 ......................................................................... 93
Sports............................................................................. 93
Trophies and Terms associated with Sports.............. 93
New Venue Announced............................................. 94
Chapter-15 ......................................................................... 94
Census 2011: Important Facts ....................................... 94
CENSUS 2011: Important Facts ................................. 94
Chapter-16 ......................................................................... 95
Important Awards.......................................................... 95
Padma Awardees 2015.............................................. 95
nd
62 National Film Awards......................................... 96
Dadasaheb Phalke ......................................................... 96
Oscar Award 2015 ..................................................... 96
Noble Prize 2014 ....................................................... 96
Sports Awards ........................................................... 97
Chapter-17 ......................................................................... 97
India & World Defence .................................................. 97
Indian Defence .......................................................... 97
Defence Production Undertakings ............................ 98
Paramilitary and Reserved Forces ............................. 98
DEFENCE RESEARCH IN INDIA ................................... 98
India's Atomic Research ............................................ 99
Chapter-18 ....................................................................... 102
Developmental Schemes by Govt. ............................... 102
Chapter-19 ....................................................................... 104
List of Important Power Plant...................................... 104
Chapter-20 ....................................................................... 105
Current Affairs Snapshot ............................................. 105
PERSONAL IDENTIFICATION NUMBER (PIN) ............ 106
IFSC (INDIAN FINANCIAL SYSTEM CODE) ................. 106
Banking Ombudsman Scheme 2006 ....................... 107
Basic Saving Bank Deposit Account ......................... 107
Micro, Small and Medium Enterprises .................... 108
Role of Banking Codes and Standard Board of India
(BCSBI) for MSEs ...................................................... 108
PAN Card ................................................................. 108
News related to RBI ................................................. 109
News Related to Banking & Finance ....................... 110
FDI Limits ................................................................. 111
3
India GDP Forecast .................................................. 111
Global Rating Agency Moody's ................................ 111
International Monetary Fund (IMF) ........................ 111
World Bank .............................................................. 111
India’s GDP will be 8% by 2017 - World Bank.......... 111
India ranking in different Indexes for 2013 ............. 112
Index/Reports Issued by different organizations in
World ....................................................................... 112
Ranking of India in Different Indexes in World 2014
................................................................................. 112
Some Important Index with Definition: ................... 112
Economic News: ...................................................... 112
Point to Remember ................................................. 114
MOU Signed by India ............................................... 114
Main Points of Food Security Bill 2013 .................... 116
Latest Government Schemes - Central and State Govt.
................................................................................. 116
Recent Books and Authors ...................................... 116
List of Important Summits of the World ................. 117
New Member .......................................................... 118
Banks with CEO/Heads, HeadQuarters, Year of
Establishment, Slogans/Taglines ............................. 119
Public Sector Banks ................................................. 119
Private Sector Banks ................................................ 119
Foreign Banks .......................................................... 120
Regional Rural Banks ............................................... 120
World Stock Exchanges Index .................................. 121
Chapter-21 ....................................................................... 122
Finance Commission .................................................... 122
Chapter-22 ....................................................................... 122
CASA ............................................................................ 122
Some Important Topics................................................ 122
Know about MUDRA BANK for Competitive Exams 122
Persons in News- March 2015 ................................. 123
ICC Cricket World Cup 2015 Quiz Questions for Exams
................................................................................. 124
Australian Open 2015- Complete Winners list PDF . 125
Quiz Questions on Budget 2015-16 ......................... 125
Government Schemes - Central and State Govt. Yojana
................................................................................. 126
 Chapter- 1
INDIAN FINANCIAL SYSTEM
INDIAN FINANCIAL SYSTEM
A financial system or financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus the areas of
deficit. A financial system is a composition of various institutions, markets, regulations and laws, practices, money manager, analysts,
transactions and claims and liabilities.
Financial System
Flow of Funds (saving)

Seekers of funds (mainly business firms and

Flow of financial services Supply of funds (mainly households)
government)
Incomes and financial claims

The word “system”, in the term “financial system”, implies a set of Indian financial system consists of:
complex and closely connected or interlined institutions, agents, 1. Financial Markets
practices, markets, transactions, claims and liabilities in the economy. 2. Financial Intermediation
The financial system is concerned about money; credit and finance- 3. Financial Instruments
the three terms are intimately related yet are somewhat different
from each other.

Financial System
Financial
Financial Market Financial Intermediaries
Assets/Instruments

Money Market Credit Money Capital

Forex Market
Instrument Market Markey Market

Capitak Market Primary Primary

Instrument Market Market

Secondary Secondary
Hybrid Instrument
Market Market

A financial market can be defined as the market in which financial
assets are created or transferred. As against a real transaction that
involves exchange of money for real goods or services, a financial
transaction involves creation or transfer of a financial asset. Financial
Assets or Financial Instruments represents a clam to the payment of a
sum of money sometime in the future and/or periodic payment in the
form of interest or dividend.
Constituents of Financial Markets
The main constituents of Financial Markets are:
Money Market – The money market is a wholesale debt market for
low-risk, highly-liquid, short-term instrument. Funds are available in
this market for periods ranging from a single day up to a year. This
market is a dominated mostly by government, banks and financial
institutions.
Capital Market – Capital Market may be defined as market dealing in
medium and long-term funds. It is an institutional arrangement for
borrowing medium and long-term funds and which provides facilities
for marketing and trading of securities. So it constitutes all long-term
borrowings from banks and financial institutions, borrowings from
foreign markets and raising of capital by issue various securities such
as shares debentures, bonds, etc. In the present chapter let us discuss
about the market for trading of securities. The market where
securities are traded known as Securities market. It consists of two
different segments namely primary market deals with new or fresh
issue of securities and is, therefore, also known as new issue market;
whereas the secondary market provides a place for purchase and sale
of existing securities and is often termed as stock market or stock
exchange.
(A) Primary Market- The primary market consists of
arrangements, which facilitate the procurement of long
FINANCIAL MARKETS
term funds by companies by making fresh issue of shares
and debentures. You know that companies make fresh issue
of shares and/or debentures at their formation stage and, if
necessary, subsequently for the expansion of business. It is
usually done through private placements to friends, relatives
and financial institutions or by making public issue.
(B) Secondary Market- The secondary market known as stock
market or stock exchange pays an equally important role in
mobilising long-term funds by providing the necessary
liquidity to holding in shares and debentures. It provides a
place where these securities can be encashed without any
difficulty and delay. It is an organised market where shares
and debentures are traded regularly with high degree of
transparency and security. In fact, an active secondary
market facilitates the growth of primary market are assured
of a continuous market for liquidity of their holdings. The
major players in the primary market are merchant bankers,
mutual funds, financial institutions and the individual
investors; and in the secondary market you have all these
and the stockbrokers who are members of the stock
exchange who facilitate the trading.
Distinction between Capital Market and Money Market
Capital Market differs from money market in many ways. First of all,
while Money Market is related to short-term funds, the Capital Market
related to long-term funds.
Secondly, while Money Market deals in securities like treasury bills,
commercial paper, trade bills, deposits certificates, etc., the Capital
Market deals in shares, debentures, bonds and government securities.
Thirdly, while the participants in Money Market are Reserve Bank of securities is determined by force of demand and supply of
India, commercial banks, non-banking financial companies, etc., the the market and keeps on fluctuating.
participants in Capital Market are stockbroker, underwriters, mutual
funds, financial institutions, and individual investors. Functions of Financial market
Fourthly, while the Money Market is regulated by Reserve Bank of (a) It provides facilities for interaction between the investors
India, the Capital Market is regulated by Securities Exchange Board of and the borrowers.
India (SEBI). (b) It provides pricing information resulting from the interaction
Forex Market- The Forex Market deals with the multicurrency between buyers and sellers in the market when they trade
requirements, which are made by the exchange of currencies. the financial assets.
Depending on the exchange rate that is applicable, the transfer of (c) It provides security to dealings in financial assets.
funds takes place in this market. This is one of the most developed (d) It ensures liquidity by providing a mechanism for an investor
and integrated market across the globe. to sell the financial assets.
Credit Market- Credit Market is a place where banks, FIs and NBFCs (e) It ensures low cost of transactions and information.
purvey short, medium and long-term loans to corporate and Stock Market- India
individuals. National Stock Exchange
In the year 1991 Pherwani Committee recommended to establish
Distinction between Primary Market and Secondary Market National Stock Exchange (NSE) in India. In 1992 the Government of
The main points of distinction between the primary market and India authorised IDBI for establishing this exchange.
secondary market are as follows: In National Stock Exchange there is trading of equity shares, bonds
1. Function: While the main function of primary market is to and government securities. India’s Stock Exchanges particularly
raise long-term funds through fresh issue of securities, the national Stock Exchange has achieved world standards in the recent
main function of secondary market is to provide continuous years. The Index of NSE id called S&P CNX Nifty 50 (Standard & Poor’s
and ready market for the existing long-term securities. Crisil NSE Index).
2. Participants: While the major players in the primary market The value of index is calculated by taking into consideration the
are financial institutions, mutual funds, underwriters and movement in share price and trading volume of total 50 shares.
individual investors, the major players in secondary market Bombay Stock Exchange (BSE)
are all of these and the stockbroker who are members of the Bombay Stock Exchange is one of the oldest stock exchanges in Asia
stock exchange. was established in the year 1875 in the name of “The Native Share &
3. Listing Requirements: While only those securities can be Stock Brokers Association”.
dealt with in the secondary market, which have been Bombay Stock Exchange is located at Dalal Street, Mumbai, India. It
approved for the purpose (listed), there is no such got recognition in 1956 from the Government of India under Securities
requirement in case of primary market. Contracts (Regulation) Act, 1956. Presently BSE SENSEX is recognised
4. Determination of prices: In case of primary market, the over the world.
prices are determined by the management with due The index of BSE is called Sensex (Sensitivity Index). The value of index
compliance with SEBI requirement for new issue of is calculated by taking into consideration the movement in share price
securities. But in case of secondary market. The price of the and trading volume of total 30 shares.

FINANCIAL INTERMEDIATION
Financial Intermediation is a systematic channel within the financial Some of the important intermediaries operating in the financial
system to ensure the transfer of financial assets to the ultimate markets include; investment bankers, underwriters, stock exchanges,
investor in order to garner the requisite amount. Financial registrars, depositories, custodian, portfolio managers, mutual funds,
intermediation in the organised sector is conducted by a wide range financial advertiser financial advertisers financial consultants, primary
of institutions functioning under the overall surveillance of the dealers, satellite dealers, self regulatory organisations, etc. Through
Reserve Bank of India. In the initial stages, the role of the the markets are different, there may be a few intermediaries offering
intermediary was mostly related to ensure transfer of funds from the their services in more than one market e.g. underwriter.
lender to the borrower. This service was offered by banks, FIs, However, the services offered by them vary from one market to
brokers and dealers. However, as the financial system widened along another.
with the developments taking place in the financial markets, the
scope of its operations also widened.
Financial intermediary Market Role
Stock Exchange Capital Market Secondary Market to Securities
Investment Bankers Capital Market, Credit Market Corporate advisory services, Issue of
securities
Underwriters Capital Market, Money Market Subscribe to Unsubscribe portion of
securities
Registrars, Depositories, Custodians Capital Market Issue of securities to the investors on behalf
of the company and handle share transfer
activity
Primary Dealers satellite Dealers Money Market Market making in Government securities
Forex Dealers Forex Market Ensure Exchange ink currencies

FINANCIAL INSTRUMENTS
Money Market Instruments- The money market can be defined as a Some of the important money market instruments are briefly
market for short-term money and financial assets that are near discussed below:
substitutes for money. The term short-term means generally a period 1. Call/Notice Money
upto one year and near substitutes to money is used to denote any 2. Treasury Bills
financial assets which can be quickly converted into money with 3. Term Money
minimum transaction cost. 4. Certificate of Deposits
5. Commercial Papers

5
1. Call/Notice- Money Market: Call/Notice money is the money
borrowed or lent on demand for a very short period. When
money is borrowed or lent for a day, it is known as Call
(Overnight) Money. Intervening holidays and/or Sunday are
excluded for this purpose. Thus money, borrowed on a day and
repaid on the next working day (irrespective of the number of
intervening holidays) is “Call Money”. When money is borrowed
or lent for more than a day and up to 14 days, it is “Notice
Money”. No collateral security is required to cover these
transactions.
2. Treasury Bills: Treasury Bills are short term (upto one year)
borrowing instruments of the Union Government. It is an IOU of
the Government. It is a promise by the government to pay a
stated sum after expiry of the stated period from the date of
issue (14/91/182/364 days i.e. less than one year). They are
issued at a discount to the face value, and on maturity the face
value is paid to the holder. The rate of discount and the
corresponding issue price are determined at each auction.
3. Inter-Bank Term Money: Inter-Bank Market for deposits of
maturity beyond 14 days is referred to as the term money
market. The entry restrictions are the same as those for
Call/Notice Money except that, as per existing regulations, they
specified entities are not allowed to lend beyond 14 days.
4. Certificate of Deposits: Certificate of Deposits (CDs) is a
negotiable money market instrument and issued in
dematerialised form or as a Usance Promissory Note, for funds
deposited at a bank or other eligible financial institutions for a
specified time period. Guidelines for issue of CDs are presently
governed by the Reserve Bank of India, as amended from time to
time.
The capital market generally consists of the following long term period
i.e., more than one year period, financial instruments; in the equity
segment Equity Shares, Preference shares, Convertible Preference
Shares, Non-Convertible Preference Shares etc and in the debt
segment debentures, zero coupon bonds, deep discounts bonds etc.
Equity Segment
Equity Shares: In accounting and finance Equity is the residual claim or
interest of the most junior class of investors in assets, after all
liabilities are paid. If liability exceeds assets, negative equity exists. In
an accounting context, shareholders’ equity (or stockholder’ equity,
shareholders funds, shareholders capital or similar terms) represents
the remaining interest in assets of a company, spread among
individual shareholders of common or preferred stock.
Shareholder’s equity: When the owners are shareholders, the interest
can be called shareholders equity; the accounting remains the same,
and it is ownership equity spread out among shareholders. If all
shareholders are in one and the same class, they share equally in
ownership equity from all perspectives. However, shareholders may
allow different priority ranking among themselves by the use of share
classes and options. This complicates both analysis for stock valuation
and accounting.
Market value of Shares: In the stock market, market price per share
does not correspond to the equity per share calculated in the
accounting statements. Stock valuations, which are often much
higher, are based on other considerations related to the business’
operating cash flow, profits and future prospects; some factors are
derived from the accounting statements.
Equity in Real Estate: The notion of equity with respect to real estate
makes the equity of redemption. This equity is a property right valued
at the difference between the market price of the property and the
amount of any mortgage or other encumbrance.
Preference Shares: Preference shares, or simply preferred, are a
special equity security that has properties of both equity and a debt
instrument and is generally considered a hybrid instrument.
Preference Shareholders are senior (i.e. higher ranking) to common
stock, but are subordinate to bonds in terms of claim or rights to their
share of the assets of the company.
6
CDs can be issued by:-
(i) Scheduled Commercial Banks excluding Regional Rural
Banks (RRBs) and Local Area Banks (LABs), and
(ii) Select all-India Financial Institutions that have been
permitted by RBI to raise short-term resources within
the umbrella limit fixed by RBI.
Banks have the freedom to issue CDs depending on their
requirements. An FI may issue CDs within the overall umbrella
limit fixed by RBI, i.e. issued of CD together with other
instruments viz., term money, term deposits, commercial papers
and inter corporate deposits should not exceed 100% of its net
owned funds, as per the latest audited balance sheet.
5. Commercial Paper: CP is a note in evidence of the debt
obligation of the issuer. On issuing commercial paper the debt
obligation is transformed into an instrument. CP is thus an
unsecured promissory note privately placed with investors at a
discount rate to face value determined by market forces. CP is
freely negotiable by endorsement and delivery. A company shall
be eligible to issue CP provided-
(a) The tangible net worth of the company, as per the latest
audited balance sheet, is not less than Rs. 4 crore;
(b) The working capital (fund-based) limit of the company from
the banking system is not less than Rs. 4 crore;
(c) The borrowable account of the company is classified as a
Standard Asset by the financing banks;
The minimum maturity period of CP is 7 days. The minimum
credit rating shall be P-2 of CRISIL or such equivalent rating by
other agencies.
CAPITAL MARKET INSTRUMENTS
Preference shares usually carry no voting rights, but may carry a
dividend and may have priority’ over common stock in the payment of
dividends and upon liquidation. Terms of the preferred stock are
stated in a “Certificate of Destination”. Similar to bond, preferred
stocks are rated by the major credit rating companies. The rating for
Preferred is generally lower since preferred dividends do not carry the
same guarantees as interest payments from bonds and they are junior
to all creditors.
Convertible Preference shares: These shares are corporate fixed-
income securities that the investor can choose to turn into a certain
number of shares of the company’s common stock after a
predetermined time span or on a specific date. The fixed income
component offers a steady income stream and some protection of the
investor’s capital. But the option to convert these securities into stock
gives the investor the opportunity to gain from a rise in share price.
Convertibles are particularly attractive to those investors who want to
participate in the rise of hot growth companies while being insulated
from a drop in price should the stocks not live up to expectations.
Debt segment
Debentures: A debenture is a document that either creates a debt or
acknowledges it, and it is debt without collateral. In corporate finance,
the term is used for a medium to long-term debt instrument used by
large companies to borrow money. In some countries the term is used
interchangeably with bound, loan stock or note. A debenture is thus
like a certificate of loan or a loan bond evidencing the fact that the
company is liable to pay a specified amount with interest and although
the money raised by the debentures becomes a part of the company’s
capital structure, it does not become share capital. Senior debenture
gets paid before subordinate debentures, and there are varying rates
and payoff for these categories.
Debentures are generally freely transferable by the debenture holder.
Debenture holders have no rights to vote in the company’s general
meetings of shareholders, but they may have separate meetings or
votes e.g. on changes to the right attached to the debentures. The
interest paid to them is a charge against profit in the company’s
financial statements.
Convertibility
There are two types of debentures:
 1. Convertible debentures, which are convertible bonds or
bonds that can be converted into equity shares of the
issuing company after a predetermined period of time.
“Convertibility” is a feature that corporations may add to the
bonds they issue to make them more attractive to buyers. In
other words, it is a special feature that a corporate bond
may carry. As a result of the advantage buyer a gets from
the ability to convert, convertible bonds typically have lower
interest rates than non-convertible corporate bonds.
2. Non-Convertible debentures, which are simply regular
debentures, cannot be converted into equity shares of the
liable company. They are debentures without the
convertibility feature attached to them. As a result, they
usually carry higher interest rates than their convertible
counterparts.
Zero Coupon Bonds: A zero-coupon bond (also called a discount bond
or deep discount bond) is a bond bought at a price lower than its face
Chapter- 2
BANKING SYSTEMS
th
Banking in India originated in the last decades of the 18 century. The
first banks were The General Bank of India which started in 1786, and
the Bank of Hindustan, both of which are now defunct. The oldest
bank in existence in India is the State Bank of India, which originated
in the Bank of Calcutta in June 1806, which almost immediately
became the Bank of Bengal. This was one of the three presidency
banks, the other two the Bank of Bombay and the Bank of Madras, all
three of which were established under characters from the British East
India Company. For many years the Presidency Banks acted as quasi-
central banks, as did their successors. The three banks merged in 1921
to form the Imperial Bank of India, which, upon India’s independence,
became the State Bank of India. Indian merchants in Calcutta
established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank,
established in 1865 and still functioning today, is the oldest Joint
Stock Bank in India. (Joint Stock Bank: A company that issue stock and
requires shareholders to be held liable for the company’s debt) It was
not the first though. That honour belongs to the Bank of Upper India,
which was established in 1863, and which survived until 1913, when it
failed, with some its assets and liabilities being transferred to the
Alliance Bank of Shimla.
When the American Civil War stopped the supply of cotton to
Lancashire from the Confederate States, promoters opened banks to
finance trading in Indian cotton. With large exposure to speculative
ventures, most of the banks opened in India during that period failed.
The depositors lost money and lost interest in keeping deposits with
banks. Subsequently, banking in India remained the exclusive domain
th
of Europeans for next several decades until the beginning of the 20
century. Foreign banks too started to arrive, particularly in Calcutta, in
the 1860s. The Comptoire d’Escompte de Paris opened a branch in
Calcutta in 1860, and another in Bombay in 1862; branches in Madras
and Puducherry, then a French colony, followed. HSBC established
itself in Bengal in 1869. Calcutta was the most active trading port in
India, mainly due to the trade of the British Empire, and so became a
banking center. The first entirely Indian joint stock bank was the
Oudh Commercial Bank, established in 1881 in Faizabad. It failed in
1958. The next was the Punjab National Bank, established in Lahore
in 1895, which has survived to the present and is now one of the
th
largest banks in India. Around the turn of the 20 century, the Indian
economy was passing through a relative period of stability. Around
five decades had elapsed since the Indian Mutiny, and the social,
industrial and other infrastructure had improved. Indian had
established small banks, most of which served particular ethnic and
religious communities.
The presidency bank dominated banking in India but there were also
some exchange banks and a number of Indian joint stock banks. All
these banks operated in different segments of the economy. The
7
value, with the face value repaid at the time of maturity. It does not
make periodic interest payments, or have so-called “coupons”, hence
the term zero-coupon bound. When the bond reaches maturity, its
investor receives its par (or face) value. Examples of zero-coupon
bonds include U.S. Treasury bills, U.S. Savings bonds, long-term zero-
coupon bonds and any type of coupon bond that has been stripped of
its coupons.
Deep Discount bonds: A Bond that is selling at a discount from par
value and has a coupon rate significantly less than the prevailing rates
of fixed-income securities with a similar risk profile.
Hybrid instruments: Hybrid instruments have both the features of
equity and debenture. This kind of instruments is called as hybrid
instruments. Examples are convertible debentures, warrants etc.
Warrants: In finance, a warrant is a security that entities the holder to
buy the underlying stock of the issuing company at a fixed exercise
price until the expiry date.
HISTORY OF INDIAN BANKING
exchange banks, mostly owned by European, concentrated on
financing foreign trade. Indian joint stock banks were generally
undercapitalised and lacked the experience and maturity to compete
with the presidency and exchange banks. This segmentation let Lord
Curzon to observe, “In respect of banking it seems we are behind the
times. We are like some old fashioned sailing ship, divided by solid
wooden bulkheads into separate and cumbersome compartments.”
The period between 1906 and 1911, saw the establishment of banks
inspired by the Swadeshi movement. The Swadeshi movement
inspired local businessman and political figures to found banks of and
for the Indian community. A number of banks established then have
survived to present such as Bank of India, Corporation bank, Indian
Bank, Bank of Baroda, Canara Bank and Central Bank of India.
Post- Independence
India’s Independence marked the end of a regime of the Laissez-faire
for the Indian banking. The Government of India initiated measures to
play an active role in the economic life of the nation, and the
Industrial Policy Resolution adopted by the government in 1948
envisaged a mixed economy. This resulted into greater involvement of
the state in different segments of the economy including banking and
finance. The major steps to regulate banking included:
The Reserve of India, India’s central banking authority, was
nationalised on January 01, 1949 under the terms of the Reserve Bank
of India (transfer to public ownership) Act, 1948 (RBI, 2005b). In 1949,
the Banking Regulation Act was enacted which empowered the
Reserve Bank of India (RBI) “to regulate, control, and inspect the
banks in India.”
The Banking Regulation Act also provided that no new bank or branch
of an existing bank could be opened without a licence from the RBI,
and no two banks could have common directors. By the 1960’s the
Indian Banking industry had become an important tool to facilitate the
development of the Indian economy.
At the same time, it had emerged as a large employer, and a debate
had ensued about the possibility to nationalise the banking industry.
Indira Gandhi, the-then Prime Minister of India expressed the
intention of the GOI in the annual conference of the All India Congress
Meeting in a paper entitled “Stray thoughts on Bank Nationalisation.”
The paper was received with positive enthusiasm.
Nationalisation
The GOI issued an ordinance and nationalised the 14 largest
commercial banks with effect from the midnight of July 19, 1969.
Jayprakash Narayan, a national leader of India, described the step as a
“masterstroke of political sagacity.” Within two weeks of the issue of
the ordinance, the Parliament passed the Banking Companies
(Acquisition and Transfer of Undertaking) Bill, and it received the
presidential approval on 09 August 1969.
A second dose of nationalisation of 6 more commercial banks followed
in 1980. The stated reason for the nationalisation was to give the
government more control of credit delivery. With the second dose of
nationalisation, the GOI controlled around 91% of the banking
business of India. Later on, in the year 1993, the government merged
New Bank of India with Punjab National Bank. It was only merger
between nationalised banks and resulted in the reduction of the
number of nationalised banks from 20 to 19. After this, until the
1990’s, the nationalised banks grew at a pace of around 4%, closer to
the average growth rate of the Indian economy.
Liberalisation
In the early 1990’s, the then Narsimha Rao government embarked o a
policy of liberalisation, licensing a small number of private banks.
These came to be known as New Generation tech-savvy banks, and
included Global Trust Bank (the first of such new generation banks to
be set up), which later amalgamated with Oriental Bank of Commerce,
Axis Bank (earlier as UTI Bank), ICICI Bank and HDFC Bank.
This move along with the rapid growth in the economy of India
revitalised the banking sector in India, which has seen rapid growth
with strong contribution from all the three sectors of banks, namely,
government banks, private banks and foreign banks. The next stage
for the Indian bank has been set up with the proposed relaxation in
the norms for Foreign Direct Investment, where all Foreign Investors
in banks may be given voting rights which could exceed the present
cap of 10%, at present it has gone up to 74% with some restrictions.

STRUCTURE OF BANKING SECTOR IN INDIA

Reserve Bank of India

Commercial Co-operative Development

Banks Banks Banks

Short-term Long-term
Nationalised Private EXIM Industrial Agricultural
Credit Credit

Agriculture Urban
Credit Credit

Reserve Bank of India

The RBI is India's central bank. The Reserve Bank of India was established on April 01, 1935 in accordance with the provisions of the Reserve
Bank of India Act, 1934. RBI acts as a banker to the Government and Banks. The central Bank maintains record of Government revenue and
expenditure under various heads. It maintains deposit accounts of all other banks and advances money to other banks, when needed. Another
important function of the Central Bank is the issuance of currency notes, regulating their circulation in the country by different methods. Banks
in the country are broadly classified as scheduled banks and non-scheduled banks.

SCHEDULED BANKS
All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are scheduled banks. These banks comprise
Scheduled Commercial Banks and Scheduled Cooperative Banks. These banks are eligible for certain facilities such as financial accommodation
from RBI and are required to fulfil certain statutory obligation. The RBI is empowered to exclude any bank from the schedule whose:
(1) Aggregate value of paid up capital and reserves fall below Rs 5 lakh
(2) Affairs are conducted in a manner detrimental to the interests of depositors
(3) Goes into liquidation and ceases to transact banking business

Commercial banks may be defined as, any banking organization that
deals with the deposits and loans of business organizations.
Commercial banks issue bank checks and drafts, as well as accept
money on term deposits. Commercial banks also act as moneylenders,
by way of instalment loans and overdrafts. Commercial banks also
allow for a variety of deposit accounts, such as checking, savings, and
time deposit. These institutions are run to make a profit and owned by
a group of individuals.
Public Sector Banks - These are banks where majority stake is held by
the Government of India. Examples of public sector banks are: SBI,
Bank of India, Canara Bank, etc.
Foreign Banks - These banks are registered and have their
headquarters in a foreign country but operate their branches in our
country. Examples of foreign banks in India are: HSBC, Citibank,
Standard Chartered Bank, etc.
COMMERCIAL BANKS
Private Sector Banks - These are banks majority of share capital of
the bank is held by private individuals. These banks are registered as
companies with limited liability. Examples of private sector banks are:
ICICI Bank, Axis bank, HDFC, etc.
Regional Rural Banks - Regional Rural Banks were established under
the provisions of an Ordinance promulgated on the 26th September
1975 and the RRB Act, 1976 with an objective to ensure sufficient
institutional credit for agriculture and other rural sectors. The area of
operation of RRBs is limited to the area as notified by Govt. of India
covering one or more districts in the State. RRBs are jointly owned by
Govt. of India, the concerned State Government and Sponsor Banks
(27 scheduled commercial banks and one State Cooperative Bank); the
issued capital of a RRB is shared by the owners in the proportion of
50%, 15% and 35% respectively. Prathama bank is the first Regional
Rural Bank in India located in the city Moradabad in Uttar Pradesh.

COOPERATIVE BANKS

8
A co-operative bank is a financial entity which belongs to its members,
who are at the same time the owners and the customers of their bank.
Co-operative banks are often created by persons belonging to the
same local or professional community or sharing a common interest.
Co-operative banks generally provide their members with a wide
range of banking and financial services (loans, deposits, banking
accounts, etc). They provide limited banking products and are
specialists in agriculture related products. Cooperative banks are the
primary financiers of agricultural activities, some small-scale industries
and self-employed workers. Co-operative banks function on the basis
of "no-profit no-loss". Anyonya Co-operative Bank Limited (ACBL) is
the first cooperative bank in India located in the city of Vadodara in
Gujarat.
The Co-operative Credit system consists of:
a. Short-term agricultural credit institutions
b. Long-term agricultural credit institutions
EXPORT-IMPORT BANK OF INDIA (EXIM BANK)
Export-Import Bank of India is the premier export finance institution
of the country, established in 1982 under the Export-Import Bank of
India Act 1981.
Organization
Exim Bank is managed by a Board of Directors, which has
representatives from the Government, Reserve Bank of India, Export
Credit Guarantee Corporation of India, a financial institution, public
sector banks, and the business community.
Functions of EXIM BANK
The Bank's functions are segmented into several operating groups
including:
 Corporate Banking Group which handles a variety of
financing programmes for Export Oriented Units (EOUs),
Importers, and overseas investment by Indian companies.
 Project Finance / Trade Finance Group handles the entire
range of export credit services such as supplier's credit,
preshipment Agri Business Group, to spearhead the initiative
to promote and support Agriexports. The Group handles
projects and export transactions in the agricultural sector for
financing.
 Small and Medium Enterprise: The group handles credit
proposals from SMEs under various lending programmes of
the Bank.
 Export Services Group offers variety of advisory and value-
added information services aimed at investment promotion.
Export Marketing Services Bank offers assistance to Indian
companies, to enable them establish their products in
overseas markets. The idea behind this service is to promote
Indian export. Export Marketing Services covers wide range
of exports oriented companies and organizations. EMS
group also covers Project exports and Export of Services.
 Besides these, the Support Services groups, which include:
Research & Planning, Corporate Finance, Loan Recovery,
Internal Audit, Management Information Services,
Information Technology, Legal, Human Resources
Management and Corporate Affairs
THE INDUSTRIAL DEVELOPMENT BANK OF INDIA
(IDBI) was established on 1 July 1964 under an Act of Parliament as a
wholly owned subsidiary of the Reserve Bank of India. In 16 February
1976, the ownership of IDBI was transferred to the Government of
India and it was made the principal financial institution for
coordinating the activities of institutions engaged in financing,
promoting and developing industry in the country.
Although Government shareholding in the Bank came down below
100% following IDBI’s public issue in July 1995, the former continues
to be the major shareholder. IDBI provides financial assistance, both in
rupee and foreign currencies, for green-field projects as also for
expansion, modernisation and diversification purposes. In the wake of
financial sector reforms unveiled by the government since 1992, IDBI
c. Non-agricultural credit institutions
The short-term agricultural credit institutions are in three categories:
i. Primary Agricultural Credit Societies at the Village level Guidelines
ii. Central Co-operative Banks at the District level
iii. State Co-operative Banks at the State level
The Long-term agricultural credit institutions are as under:
1. Primary Land Development Banks [at the base]
2. Central Land Development Banks [at the apex]
Thus, the apex of the co-operative organization in a state is the State
Bank to which Central Banks are affiliated. The Primary societies are
mostly affiliated to the Central Banks. Some of them are grouped into
local unions for the purposes of supervision. All of them are forbidden
to lend to non-members except with the sanction of the Registrar of
Co-operative societies.
DEVELOPMENT BANKS
also provides indirect financial assistance by way of refinancing of
loans extended by State-level financial institutions and banks and by
way of rediscounting of bills of exchange arising out of sale of
indigenous machinery on deferred payment terms.
IDBI has played a pioneering role, particularly in the prereform era
(1964–91),in catalyzing broad based industrial development in the
country in keeping with its Government-ordained ‘development
banking’ charter.
Narasimam committee recommends that IDBI should give up its direct
financing functions and concentrate only in promotional and
refinancing role. But this recommendation was rejected by the
government. Later RBI constituted a committee under the
chairmanship of S.H.Khan to examine the concept of development
financing in the changed global challenges. This committee is the first
to recommend the concept of universal banking. The committee
wanted the development financial institution to diversify its activity. It
recommended harmonising the role of development financing and
banking activities by getting away from the conventional distinction
between commercial banking and developmental banking.
In September 2003, IDBI diversified its business domain further by
acquiring the entire shareholding of Tata Finance Limited in Tata
Home finance Ltd., signaling IDBI’s foray into the retail finance sector.
The fully owned housing finance subsidiary has since been renamed
‘IDBI Home finance Limited’. In view of the signal changes in the
operating environment, following initiation of reforms since the early
1990s, Government of India has decided to transform IDBI into a
commercial bank without eschewing its secular development finance
obligations. The migration to the new business model of commercial
banking, with its gateway to low-cost current, savings bank deposits,
would help overcome most of the limitations of the current business
model of development finance while simultaneously enabling it to
diversify its client/ asset base. Towards this end, the IDB (Transfer of
Undertaking and Repeal) Act 2003 was passed by Parliament in
December 2003. The Act provides for repeal of IDBI Act,
corporatisation of IDBI (with majority Government holding; current
share: 58.47%) and transformation into a commercial bank.
The provisions of the Act have come into force from 2 July 2004 in
terms of a Government Notification to this effect. The Notification
facilitated formation, incorporation and registration of Industrial
Development Bank of India Ltd. as a company under the Companies
Act, 1956 and a deemed Banking Company under the Banking
Regulation Act 1949 and helped in obtaining requisite regulatory and
statutory clearances, including those from RBI.
IDBI would commence banking business in accordance with the
provisions of the new Act in addition to the business being transacted
under IDBI Act, 1964 from 1 October 2004, the ‘Appointed Date’
notified by the Central Government. IDBI Bank, with which the parent
IDBI was merged, was a new generation Bank. The Pvt Bank was the
fastest growing banking company in India. The bank was pioneer in
adapting to policy of first mover in tier 2 cities. The Bank has one of
the highest productivity per employee in Indian banking industry.
 NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)
NABARD is an apex development bank in India having headquarters
based in Mumbai (Maharashtra) and other branches are all over the
country. It was established on 12 July 1982 on the recommendations
of Shivaraman Committee, by an act of Parliament on 12 July 1982 to
implement the National Bank for Agriculture and Rural Development
Act 1981. It replaced the Agricultural Credit Department (ACD) and
Rural Planning and Credit Cell (RPCC) of Reserve Bank of India, and
Agricultural Refinance and Development Corporation (ARDC). Its main
focus was to uplift rural India by increasing the credit flow for
elevation of agriculture & rural non farm sector. NABARD will
complete its 31 years on 12 July 2012. It has been accredited with
"matters concerning policy, planning and operations in the field of
credit for agriculture and other economic activities in rural areas in
India". RBI sold its stake in NABARD to the Government of India, which
now holds 99% stake
Role of NABARD-
NABARD is the apex institution in the country which looks after the
development of the cottage industry, small industry and village
industry, and other rural industries. NABARD also reaches out to allied
economies and supports and promotes integrated development. And
to help NABARD discharge its duty, it has been given certain roles as
follows:
NBFCs are financial institutions that provide banking services without
meeting the legal definition of a bank, i.e. one that does not hold a
banking license. These institutions are not allowed to take deposits
from the public. Nonetheless, all operations of these institutions are
still exercised under bank regulation.
In India a Non-Banking Financial Company (NBFC) is a company
registered under the Companies Act, 1956 engaged in the business of
loans and advances, acquisition of shares, stock, bond sire-purchase,
insurance business, or chit business: but does not include any
institution whose principal business is that includes agriculture or
industrial activity; or the sale, purchase or construction of immovable
property.
Difference between NBFCs & Banks
NBFCs perform functions similar to that of banks; however there are a
few differences in that an NBFC cannot accept demand deposits; an
NBFC is not a part of the payment and settlement system and as such,
Nonbanking Finance Companies (NBFCs) Comment an NBFC cannot
issue cheques drawn on itself; and deposit insurance facility of the
Deposit Insurance and Credit Guarantee Corporation is not available
for NBFC depositors, unlike banks.
MICROFINANCE INSTITUTIONS (MFIS)
Microfinance institutions, also known as MFIs offer financial services
to underprivileged and impoverished communities.
Microfinance is the provision of financial services to low-income
clients or solidarity lending groups including consumers and the self-
employed, who traditionally lack access to banking and related
services.
The Reserve Bank of India (RBI) is the central banking institution of
India and controls the monetary policy of the Indian rupee as well as
currency reserves. The institution was established on 1 April 1935
during the British Raj in accordance with the provisions of the Reserve
Bank of India Act, 1934. The share capital was divided into shares of
Rs.100 each fully paid which was entirely owned by private
shareholders in the beginning. Reserve Bank of India plays an
important part in the development strategy of the government. It is a
member bank of the Asian Clearing Union. Reserve Bank of India was
nationalized in the year 1949.
The general superintendence and direction of the Bank is entrusted to
Central Board of Directors of 21 members, the Governor and four
1. Serves as an apex financing agency for the institutions providing
investment and production credit for promoting the various
developmental activities in rural areas.
2. Takes measures towards institution building for improving
absorptive capacity of the credit delivery system, including
monitoring, formulation of rehabilitation schemes, restructuring of
credit institutions, training of personnel, etc.
3. Co-ordinates the rural financing activities of all institutions engaged
in developmental work at the field level and maintains liaison with
Government of India, State Governments, Reserve Bank Of India (RBI)
and other national level institutions concerned with policy
formulation.
4. Undertakes monitoring and evaluation of projects refinanced by it.
5. NABARD refinances the financial institutions which finances the
rural sector.
6. NABARD helps to develop the institutions which help the rural
economy.
7. NABARD also keeps a check on its client institutes.
8. It regulates the institution which provides financial help to the rural
economy.
9. It provides training facilities to the institutions working the field of
rural upliftment.
10. It regulates the cooperative banks and the RRB’s.
NON-BANK FINANCIAL COMPANIES (NBFCS)
More broadly, it is a movement whose object is "a world in which as
many poor and near-poor households as possible have permanent
access to an appropriate range of high quality financial services,
including not just credit but also savings, insurance, and fund
transfers." Those who promote microfinance generally believe that
such access will help poor people out of poverty.
Microfinance is a broad category of services, which includes
microcredit. Microcredit is provision of credit services to poor clients.
Although microcredit is one of the aspects of microfinance, conflation
of the two terms is endemic in public discourse. Critics often attack
microcredit while referring to it indiscriminately as either 'microcredit'
or 'microfinance'. Due to the broad range of microfinance services, it
is difficult to assess impact, and very few studies have tried to assess
its full impact.
SELF-HELP GROUPS OR MICRO CREDIT
Self-Help Groups or Micro Credit are defined as a group of individual
members who voluntarily come together for a common collective
purpose basically for savings and borrowings. In practice these groups
are comprised of individual members known to each other coming
from the same village, community and even neighborhood
(homogenous group) and have certain pre-group social binding
factors. Micro credit programme, enabling the poor people to be
thrifty and in accessing loans and other financial services, was
launched in 1992 with a SHG- BANK linkage arrangement. The poor
are encouraged to voluntarily come together to save small amounts
regularly and extent small loans among themselves. On attaining
maturity to handle their own resources, they are in a position to
negotiate with banks for credit facilities.
RESERVE BANK OF INDIA
Deputy Governors, two Government official from the Ministry of
Finance, ten nominated Directors by the Government to give
representation to important elements in the economic life of the
country, and four nominated Directors by the Central Government to
represent the four local Boards with the headquarters at Mumbai,
Kolkata, Chennai and New Delhi. Local Boards consist of five members
each Central Government appointed for a term of four years to
represent territorial and economic interests and the interests of co-
operative and indigenous banks.
STRUCTURE
Central Board of Directors: The Central Board of Directors is the main
committee of the central bank. The Government of India appoints the
directors for a four-year term. The Board consists of a governor, four
deputy governors, fifteen directors to represent the regional boards,
one from the Ministry of Finance and ten other directors from various
fields.
Governors: The current Governor of RBI is Dr. Raghuram Rajan; he
took over from the previous governor Duvvuri Subbarao in Sept 2013.
There are four deputy governors, currently Shri H.R. Khan, Dr. Urjit R.
Patel, Shri R. Gandhi, and Shri S. S. Mundra.
Supportive Bodies: The Reserve Bank of India has four regional
representations: North in New Delhi, South in Chennai, East in Kolkata
and West in Mumbai. The representations are formed by five
members, appointed for four years by the central government and
serve—beside the advice of the Central Board of Directors —as a
forum for regional banks and to deal with delegated tasks from the
central board. The institution has 22 regional offices.
The Board of Financial Supervision (BFS), formed in November 1994,
serves as a CCBD committee to control the financial institutions. It has
four members, appointed for two years, and takes measures to
strength the role of statutory auditors in the financial sector, external
monitoring and internal controlling systems.
1. Issue of Notes
Under Section 22 of the Reserve Bank of India Act, RBI has sole right to
issue currency notes of various denominations except one rupee
notes. The One Rupee note is issued by Ministry of Finance and it
bears the signatures of Finance Secretary, while other notes bear the
signature of Governor RBI. However RBI is the only source of legal
tender money because distribution of one rupee notes and coins and
small coins all over the country is undertaken by the Reserve Bank as
agent of the Government.
Issue Department: RBI has a separate Issue Department which is
responsible for the issue of currency notes.
Originally, the assets of the Issue Department were to consist of not
less than two-fifths of gold coin, gold bullion or sterling securities
provided the amount of gold was not less than Rs. 40 crore in value.
The remaining three-fifths of the assets might be held in rupee coins,
Government of India rupee securities, eligible bills of exchange and
promissory notes payable in India. Since 1957, the Reserve Bank of
India is required to maintain gold and foreign exchange reserves of Rs.
200 crore, of which at least Rs. 115 crore should be in gold. The
system as it exists today is known as the minimum reserve system.
2. Banker to Government
The second important function of the Reserve Bank of India is to act as
Government banker, agent and adviser. The Reserve Bank is agent of
Central Government and of all State Governments in India excepting
that of Jammu and Kashmir. The RBI performs all the banking
functions of the State & Central Government and tenders advice
related to economic and monetary policy. The Reserve Bank of India
helps the Government - both the Union and the States to float new
loans and to manage public debt. The Bank makes ways and means
advances to the Governments for 90 days. It makes loans and
advances to the States and local authorities. It acts as adviser to the
Government on all monetary and banking matters.
3. Bankers' Bank:
The Reserve Bank of India acts as the bankers’ bank. As per the
provisions of the Banking Companies Act of 1949, every scheduled
bank was required to maintain with the Reserve Bank a cash balance
equivalent to 5% of its demand liabilities and 2% of its time liabilities
in India. However, by an amendment of 1962, the distinction between
demand and time liabilities was abolished and banks have been asked
to keep cash reserves equal to 3% of their aggregate deposit liabilities.
The minimum cash requirements can be changed by the Reserve Bank
of India.
4. Controller of Credit:
The Reserve Bank of India has the responsibility of the controller of
credit i. e. it has the power to influence the volume of credit created
by banks in India. For this purpose RBI makes extensive use of
qualitative and quantitative use of techniques such as changing the
11
The Tarapore committee was set up by the Reserve Bank of India
under the chairmanship of former RBI deputy governor S. S. Tarapore
to "lay the road map" to capital account convertibility. The five-
member committee recommended a three-year time frame for
complete convertibility by 1999–2000.
On 1 July 2007, in an attempt to enhance the quality of customer
service and strengthen the grievance redressal mechanism, the
Reserve Bank of India created a new customer service department.
Offices and branches
The Reserve Bank of India has 4 zonal offices. It has 22 regional offices
at most state capitals and at a few major cities in India. Few of them
are located in Ahmedabad, Bangalore, Bhopal, Bhubaneswar,
Chandigarh, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Jammu,
Kanpur, Kolkata, Lucknow, Mumbai, Nagpur, Patna, and
Thiruvananthapuram. Besides it has sub-offices at Agartala, Dehradun,
Gangtok, Kochi, Panaji, Raipur, Ranchi, Shimla and Srinagar.
The bank has also two training colleges for its officers, viz. Reserve
Bank Staff College at Chennai and College of Agricultural Banking at
Pune. There are also four Zonal Training Centres at Belapur, Chennai,
Kolkata and New Delhi.
FUNCTIONS OF RBI
Bank rate or through open market operations. As per Banking
Regulation Act of 1949, the Reserve Bank of India can ask any
particular bank or the whole banking system not to lend to particular
groups or persons on the basis of certain types of securities. Since
1956, selective controls of credit are increasingly being used by the
Reserve Bank.
5. Custodian of Foreign Reserves:
The Reserve Bank of India has the responsibility to maintain the
official rate of exchange. As per the Reserve Bank of India Act of 1934,
the Bank was required to buy and sell at fixed rates any amount of
sterling in lots of not less than Rs. 10,000. After India became a
member of the International Monetary Fund in 1946, the Reserve
Bank has the responsibility of maintaining fixed exchange rates with all
other member countries of the I. M. F. Besides maintaining the rate of
exchange of the rupee, the Reserve Bank has to act as the custodian of
India’s reserve of international currencies. The vast sterling balances
were acquired and managed by the Bank. Further, the RBI has the
responsibility of administering the exchange controls of the country.
6. Monetary authority
The Reserve Bank of India is the main monetary authority of the
country and beside that the central bank acts as the bank of the
national and state governments. It formulates implements and
monitors the monetary policy as well as it has to ensure an adequate
flow of credit to productive sectors. Objectives are maintaining price
stability and ensuring adequate flow of credit to productive sectors.
The national economy depends on the public sector and the central
bank promotes an expansive monetary policy to push the private
sector since the financial market reforms of the 1990s. The institution
is also the regulator and supervisor of the financial system and
prescribes broad parameters of banking operations within which the
country's banking and financial system functions. Objectives are to
maintain public confidence in the system, protect depositors' interest
and provide cost-effective banking services to the public. The Banking
Ombudsman Scheme has been formulated by the Reserve Bank of
India (RBI) for effective addressing of complaints by bank customers.
The RBI controls the monetary supply, monitors economic indicators
like the gross domestic product and has to decide the design of the
rupee banknotes as well as coins.
7. Supervisory Functions
In addition to its traditional central banking functions, the Reserve
bank has certain non-monetary functions of the nature of supervision
of banks and promotion of sound banking in India.
8. Promotional functions
RBI performs a variety of developmental and promotional functions
also such as helping in the
1. Set up of the IFCI and the SFC (State Financial Corporations)
2. Set up the Deposit Insurance Corporation in 1962
3. The Unit Trust of India in 1964, 5. The Agricultural Refinance Corporation of India in 1963
4. The Industrial Development Bank of India also in 1964, 6. Industrial Reconstruction Corporation of India in 1972.

NATIONAL HOUSING BANK (NHB)

The National Housing Bank (NHB) is a state owned bank and regulation authority in India, created on July 8, 1988 under section 6 of the
National Housing Bank Act (1987). The Headquarter of NHB is in New Delhi. The institution, owned by the Reserve Bank of India, was
established to promote private real estate acquisition. The NHB is regulating and re-financing social housing programs and other activities like
research and IT-initiatives, too.

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

SIDBI is an independent financial institution aimed to aid the growth lending. Recently it has opened seven branches christened as Micro
and development of micro, small and medium-scale enterprises in Finance branches, aimed especially at dispensing loans up to Rs. 5.00
India. Set up on April 2, 1990 through an act of parliament, it was lakh. It is an apex body and nodal agency for formulating, coordination
incorporated initially as a wholly owned subsidiary of Industrial and monitoring the policies and programme for promotion and
Development Bank of India. Current shareholding is widely spread development of small scale industries.
among various state-owned banks, insurance companies and financial SIDBI has also floated several other entities for related activities.
institutions. Beginning as a refinancing agency to banks and state level Credit Guarantee Fund Trust for Micro and Small Enterprises provides
financial institutions for their credit to small industries, it has guarantees to banks for collateral-free loans extended to SME. SIDBI
expanded its activities, including direct credit to the SME through 100 Venture Capital Ltd. is a venture capital company focused at SME. SME
branches in all major industrial clusters in India. Rating Agency of India Ltd. (SMERA) provides composite ratings to
Besides, it has been playing the development role in several ways such SME.
as support to micro-finance institutions for capacity building and on
Difference between RTGS and NEFT
The fundamental difference between RTGS and NEFT is that while RTGS processes in real-time (‘push’ transfer), while NEFT processes in
RTGS is based on gross settlement, NEFT is based on net-settlement. cycles during the given working day. This causes a NEFT transaction
Gross settlement is where a transaction is completed on a one-to-one that is initiated later than the last cycle to be completed the next day.
basis without bunching with other transactions. As for a Deferred Net Summary:
Basis (DNS), or net settlement, this is where transactions are RTGS is Real Time Gross Settlement, while NEFT is National Electronic
completed in batches at specific times. Here, all transfers will be held Funds Transfer. RTGS completes transactions in real-time, and is
up until a specific time. RTGS transactions are processed throughout therefore faster than NEFT, which completes transactions in cycles.
the working hours of the system. RTGS transactions involve large RTGS is gross settlement, where a transfer is completed on a one-to-
amounts of cash; basically only funds above Rs 200,000 may be one basis, while NEFT is on a Deferred Net Basis, where transfers are
transferred using this system. For NEFT, any amount below Rs 200,000 bundled and deferred for a specific time. RTGS is a high value transfer
may be transferred, and this system is generally for smaller value system, handling funds worth Rs 200,000 and above, while NEFT
transactions involving smaller amounts of money. transfers generally smaller amounts below Rs 200,000.

Chapter-3
REGULATORY BODIES
Financial sector in India has experienced a better environment to
grow with the presence of higher competition. The financial system in
India is regulated by independent regulators in the field of banking,
insurance, and mortgage and capital market. Government of India
plays a significant role in controlling the financial market in India.
Ministry of Finance, Government of India controls the financial sector
in India. Every year the finance ministry presents the annual budget
on 28th February. The Reserve Bank of India is an apex institution in
controlling banking system in the country. Its monetary policy acts as
a major weapon in India's financial market.
Securities and Exchange Board of India (SEBI) is one of the regulatory
authorities for India's capital market.
Regulatory agencies
Broadly, there are supposed to be product-wise demarcations of
regulatory space for various regulators: Reserve Bank of India (RBI)
regulates credit products, savings and remittances; the Securities and
Exchange Board of India (SEBI) regulates investment products; the
Insurance Regulatory and Development Authority (IRDA) regulate
Securities and Exchange Board of India (SEBI) was first established in
the year 1988 as a non-statutory body for regulating the securities
market. It became an autonomous body in 1992 and more powers
were given through an ordinance. Since then it regulates the market
through its independent powers.
Objectives of SEBI
As an important entity in the market it works with following
objectives:
 It tries to develop the securities market.
FINANCIAL REGULATORY BODIES
insurance products; and the Pension Fund Regulatory and
Development Authority (PFRDA) regulates pension products.
The Forward Markets Commission (FMC) regulates commodity-based
exchange-traded futures. Practically, as was illustrated by the recent
PFRDA-IRDA conflict, since certain entities (especially insurance
companies) primarily engaged in one product also offer other
products; it becomes difficult to impose product-based regulation. So,
essentially, most regulation turns out to be entity-based.
Quasi-Regulatory Agencies
There are other government bodies which perform quasi-regulatory
functions, including National Bank for Agriculture and Rural
Development (NABARD), Small Industries Development Bank of India
(SIDBI), and National Housing Bank (NHB). NABARD supervises
regional rural banks as well as state and district cooperative banks.
NHB regulates housing finance companies, and SIDBI regulates the
state finance corporations.
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
 Promotes Investors Interest.
 Makes rules and regulations for the securities market.
Functions of SEBI
 Regulates Capital Market Checks Trading of securities.
 Checks the malpractices in securities market.
 It enhances investor's knowledge on market by providing
education.
 It regulates the stockbrokers and sub-brokers.

12
 To promote Research and Investigation
SEBI in India's Capital Market
SEBI from time to time have adopted many rules and regulations for
enhancing the Indian capital market. The recent initiatives
undertaken are as follows:
Sole Control on Brokers: Under this rule every brokers and sub
brokers have to get registration with SEBI and any stock exchange in
India.
The Foreign Investment Promotion Board is a special agency in India
dealing with the matters relating to Foreign Direct Investment. This
special board was set up with a view to raise the volume of
investment to the country. The sole aim of the board is to create a
base in the country by which a larger volume of investment can be
drawn to the country.
On 18 February 2003, the board was transferred to the Department
of Economic Affairs (DEA) Ministry of Finance.
Important functions of the Board
Important functions of the Board are as follows:
 Formulating proposals for the promotion of investment.
 Steps to implement the proposals.
 Setting friendly guidelines for facilitating more investors.
 Inviting more companies to make investment.
 To recommend the Government to have necessary actions for
attracting more investment.
Financial Stability and Development Council is apex-level body
constituted by government of India. The idea to create such a super
regulatory body was first mooted by Raghuram Rajan Committee in
1998.The recent global economic meltdown has put pressure on
governments and institutions across globe to regulate the economic
assets. This council is seen as an India's initiative to be better
conditioned to prevent such incidents in future. The new body
envisages strengthening and institutionalising the mechanism of
maintaining financial stability, financial sector development, and
inter-regulatory coordination along with monitoring macro-
prudential regulation of economy.
Composition of the council
Chairperson: The Union Finance Minister of India
Members:
 Governor Reserve Bank of India (RBl),
 Finance Secretary and/ or Secretary,
 Department of Economic Affairs (DEA) Secretary,
 Department of Financial Services (DFS) Chief Economic Advisor,
 Ministry of Finance Chairman,
 Securities and Exchange Board of India (SEBI) Chairman,
 Insurance Regulatory and Development Authority (IRDA).
 Chairman Pension Fund Regulatory and Development Authority
(PFRDA)
This is a list on the major financial institutions in India and their respective date of starting operations.
Financial Institution
13
For Underwriters: For working as an underwriter an asset limit of 20
lakh has been fixed.
For Share Prices: According to this law all Indian companies are free
to determine their respective share prices and premiums on the
share prices.
For Mutual Funds: SEBI's introduction of SEBI (Mutual Funds)
Regulation in 1993 is to have direct control on all mutual funds of
both public and private sector.
FOREIGN INVESTMENT PROMOTION BOARD
With regards to the structure of the Foreign Investment Promotion
Board, the board comprises the following group of secretaries to the
Government:
 Secretary to Government Department of Economic Affairs,
Ministry of Finance- Chairman.
 Secretary to Government Department of Industrial Policy and
Promotion, Ministry of commerce and Industry.
 Secretary to Government, Department of Commerce, Ministry of
Commerce and Industry.
 Secretary to Government, Economic Relations, Ministry of
External Affairs.
 Secretary to Government, Ministry of Overseas Indian Affairs. In
the recent years, particularly after the implementation of the
new economic policy, the Government has undertaken many
steps to attract more investors for investing in the country. The
new proposals for the foreign investment are allowed under the
automatic route keeping in view the sartorial practices.
FINANCIAL SECTOR DEVELOPMENT COUNCIL (FSDC)
 Joint Secretary (Capital Markets), DEA, will be the Secretary of
the Council
 The Chairperson may invite any person whose presence is
deemed necessary for any of its meeting(s).
Responsibilities of the council
 Financial Stability
 Financial Sector Development
 Inter-Regulatory Coordination
 Financial Literacy
 Financial Inclusion
 Macro prudential supervision of the economy including the
functioning of large financial conglomerates
 Coordinating India's international interface with financial sector
bodies like the Financial Action Task Force (FATF), Financial
Stability Board (FSB)and any such body as may be decided by the
Finance Minister from time to time.
Structural and Functional changes
To Entrust it with the tasks of existing regulators i.e. RBI, IRDA, SEBI
and PFRDA.
The Council shall have a Sub-committee headed by the Governor, RBl.
The Sub-committee will replace the existing High Level Coordination
Committee on Financial Markets.
MAJOR FINANCIAL INSTITUTIONS IN INDIA
Date of Starting
 Imperial Bank of India 1921
Reserve Bank of India April 1, 1935
Industrial Finance corporation of India 1948
State Bank of India July 1, 1955
Unit Trust of India Feb. 1, 1964
IDBI July 1964
NABARD July 12, 1982
SIDBI 1990
EXIM Bank January 1, 1982
National Housing Bank July 1988
Life Insurance Corporation (LIC) September 1956
General Insurance Corporation (GIC) November 1972
Regional Rural Banks Oct. 2, 1975
Risk Capital and Technology Finance Corporation Ltd. March 1975
Technology Development & Information Co. of India Ltd. 1989
Infrastructure Leasing & Financial Services Ltd. 1988
Housing Development Finance Corporation Ltd. (HDFC) 1977

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY (IRDA)

The IRDA is a national agency of the Government of India, based in
Hyderabad. It was formed by an act of Indian Parliament known as
IRDA Act 1999, which was amended in 2002 to incorporate some
emerging requirements. Mission of IRDA as stated in the act is "to
protect the interests of the Policyholders, to regulate, promote and
ensure orderly growth of the Insurance industry and for matters
connected therewith or incidental thereto."
In 2010, the Government of India ruled that the Unit Linked Insurance
Plans (ULIPs) will be governed by IRDA, and not the market regulator
Securities and Exchange Board of India.
Duties, Powers and Functions of IRDA
Section 14 of IRDA Act, 1999 lays down the duties, powers and
functions of IRDA:
1. Subject to the provisions of this Act and any other law for the time
being in force, the Authority shall have the duty to regulate, promote
and ensure orderly growth of the insurance business and re-insurance
business.
2. Without prejudice to the generality of the provisions contained in
subsection (1), the powers and functions of the Authority shall
include:
a. Issue to the applicant a certificate of registration, renew, modify,
withdraw, suspend or cancel such registration
b. Protection of the interests of the policy holders in matters
concerning assigning of policy, nomination by policy holders, insurable
interest, settlement of Insurance claim, surrender value of policy and
other terms and conditions of contracts of insurance
c. Specifying requisite qualifications, code of conduct and practical
training for intermediary or insurance intermediaries and agents
d. Specifying the code of conduct for surveyors and loss assessors
e. Promoting efficiency in the conduct of insurance business
f. Promoting and regulating professional organisations connected with
the insurance and re-insurance business
g. Levying fees and other charges for carrying out the purposes of this
Act
h. Calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries and other organisations
connected with the insurance business
i. Control and regulation of the rates, advantages, terms and
conditions that may be offered by insurers in respect of general
insurance business not so controlled and regulated by the Tariff
Advisory Committee under section 64U of the Insurance Act, 1938 (4
of 1938)
j. Specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers
and other insurance intermediaries
k. Regulating investment of funds by insurance companies
l. Regulating maintenance of margin of solvency
m. Adjudication of disputes between insurers and intermediaries or
insurance intermediaries
n. Supervising the functioning of the Tariff Advisory Committee
o. Specifying the percentage of premium income of the insurer to
finance schemes for promoting and regulating professional
organisations referred to in clause (f)
p. Specifying the percentage of life insurance business and general
insurance business to be undertaken by the insurer in the rural or
social sector
q. Exercising such other powers as may be prescribed from time to
time,

PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY (PFRDA)

Pension Fund Regulatory and Development Authority (PFRDA) is the prudential regulator for the NPS. PFRDA was established by the
Government of India on 23 August 2003 to promote old age income security by establishing, developing and regulating pension funds. PFRDA
has set up a Trust under the Indian Trusts Act, 1882 to oversee the functions of the PFMs. The NPS Trust is composed of members representing
diverse fields and brings wide range of talent to the regulatory framework

FORWARD MARKETS COMMISSION (FMC)

The Forward Markets Commission (FMC) is the chief regulator of forwards and futures markets in India. As of March 2009, it regulated Rs 52
trillion worth of commodity trades in India. It is headquartered in Mumbai and unusually for a financial regulatory agency is overseen by the
Ministry of Consumer Affairs, Food and Public Distribution (India). Mr. Ramesh Abhishek replaced Mr. B.C. Khatua as the chairman of the
commission in 2011.

CATEGORIES OF PRIORITY SECTOR

The broad categories of priority sector for all scheduled commercial
banks are as under:
1. Agriculture (Direct and Indirect finance): Direct finance to given for agriculture and allied activities directly to individual
agriculture shall include short, medium and long term loans farmers, Self-Help Groups (SHGs) or Joint Liability Groups (JLGs)

14
 of individual farmers without limit and to others (such as
corporate, partnership firms and institutions) up to Rs. 20 lakh,
for taking up agriculture/allied activities.
a. Indirect finance to agriculture shall include loans
given for agriculture and allied activities.
2. Small Scale Industries (Direct and Indirect Finance): Direct
finance to small scale industries (SSI) shall include all loans given
to SSI units which are engaged in manufacture, processing or
preservation of goods and whose investment in plant and
machinery (original cost) excluding land and building does not
exceed the amounts specified. Indirect finance to SSI shall
include finance to any person providing inputs to or marketing
the output of artisans, village and cottage industries, handlooms
and to cooperatives of producers in this sector.
3. Small Business / Service Enterprises shall include small business,
retail trade, professional & self employed persons, small road &
water transport operators and other service enterprises as per
the definition given in Section I and other enterprises that are
engaged in providing or rendering of services, and whose
investment in equipment does not exceed the amount specified
in Section I, appended.
4. Micro Credit : Provision of credit and other financial services and
products of very small amounts not exceeding Rs. 50,000 per
borrower to the poor in rural, semi-urban and urban areas,
either directly or through a group mechanism, for enabling them
to improve their living standards, will constitute micro credit.
5. Education loans: Education loans include loans and advances
granted to only individuals for educational purposes up to Rs. 10
lakh for studies in India and Rs. 20 lakh for studies abroad, and
do not include those granted to institutions;
6. Housing loans: Loans up to Rs. 15 lakh for construction of
houses by individuals, (excluding loans granted by banks to their
own employees) and loans given for repairs to the damaged
houses of individuals up to Rs.1 lakh in rural and semi-urban
areas and up to Rs.2 lakh in urban areas
Total Priority Sector advances
 40% of Adjusted Net Bank Credit (ANBC) or credit
equivalent amount of Off-Balance Sheet Exposure,
whichever is higher
 32% of ANBC or credit equivalent amount of Off-Balance
Sheet Exposure, whichever is higher.

Chapter-4
INDIAN ECONOMY CONCEPTS & UNDERSTANDING BUDGET
INDIAN ECONOMY CONCEPTS & UNDERSTANDING
Budget India is developing into an open-market economy, yet traces However, India's economic growth began slowing in 2011 because of a
of its past autarkic policies remain. Economic liberalization, including tight monetary policy, intended to address persistent inflation, and a
industrial deregulation, privatization of state-owned enterprises, and decline in investment, caused by investor pessimism about domestic
reduced controls on foreign trade and investment, began in the early economic reforms and about the global situation. High international
1990s and has served to accelerate the country's growth, which has crude prices have exacerbated the government's fuel subsidy
averaged more than 7% per year since 1997. India's diverse economy expenditures, contributing to a higher fiscal deficit and a worsening
encompasses traditional village farming, modern agriculture, current account deficit. In late 2012, the Indian Government
handicrafts, a wide range of modern industries, and a multitude of announced reforms and deficit reduction measures to reverse India's
services. slowdown. The outlook India's medium-term growth is positive due to
Slightly more than half of the work force is in agriculture, but services a young population and corresponding low dependency ratio, healthy
are the major source of economic growth, accounting for nearly two- savings and investment rates, and increasing integration into the
thirds of India's output, with less than one-third of its labour force. global economy.
India has capitalized on its large educated English-speaking population India has many long-term challenges that it has not yet fully
to become a major exporter of information technology services and addressed, including poverty, inadequate physical and social
software workers. In 2010, the Indian economy rebounded robustly infrastructure, limited non-agricultural employment opportunities,
from the global financial crisis - in large part because of strong inadequate availability of quality basic and higher education, and
domestic demand - and growth exceeded 8% year-on-year in real accommodating rural-to-urban migration.
terms.
CONCEPT OF NATIONAL INCOME
National income is the measurement of flow of services and goods in 3. Net National Product (NNP) at Market Prices
economic system. The national wealth is the measurement of present 4. Net National Product (NNP) at Factor Cost or National Income
assets available on a given time while the National income is the 5. Personal Income
measurement of the production power of economic system in a given 6. Disposable Income
time period. Gross Domestic Product (GDP) Gross National Product is the total
The figures of National income are based on the financial year (i.e. market value of all final goods and services produced in a year. GNP
from 1st April to 31st March). The base of one year is taken for includes net factor income from abroad whereas GDP does not.
calculating National income which is called base year, as all the
seasons come in a year. The data of estimation of India’s National Therefore,
income are issued by Central Statistical Organisation (CSO). GNP = GDP + Net factor income from abroad.
The important concepts of national income are: Net factor income from abroad = factor income received by Indian
1. Gross Domestic Product (GDP) nationals from abroad – factor income paid to foreign nationals
2. Gross National Product (GNP) working in India.
Parameter GDP GNP
Stands for Gross Domestic Product Gross National Product
Definition An estimated value of the total worth of a country’s GDP (+) total capital gains from overseas investment (-)
production and services, calculated over the course on one income earned by foreign nationals domestically
year
Layman Usage Total value of products & Services produced within the Total value of Goods and Services produced by all nationals
territorial boundary of a country of a country (whether within or outside the country)
Formula for GDP = consumption + investment + (government GNP = GDP + NR (Net income from assets abroad (Net
Calculation spending) + (exports − imports) Income Receipts))

15
 Uses Business, Economic Forecasting
Net National Product (NNP) at Market Price
NNP is the market value of all final goods and services after providing
for depreciation. That is, when charges for depreciation are deducted
from the GNP we get NNP at market price. Therefore’
NNP = GNP – Depreciation
Depreciation is the consumption of fixed capital or fall in the value of
fixed capital due to wear and tear.
Net National Product (NNP) at Factor Cost
(National Income) NNP at factor cost or National Income is the sum of
wages, rent, interest and profits paid to factors for their contribution
to the production of goods and services in a year. It may be noted
that:
NNP at Factor Cost = NNP at Market Price – Indirect Taxes + Subsidies.
Factor Cost: Factor cost is the sum total of amount paid to four main
factors of production viz; land (rent), labour, capital and
entrepreneurship (profit). It is exclusive of taxes or subsidies.
National Income at current prices: If goods and services are valued at
current prices i.e. prices prevailing in the market in the particular year,
we get the National Income at current prices. National Income at
constant prices: When National Income is calculated at constant prices
i.e., prices prevailing in a particular year, called the ‘Base Year’, we get
National Income at constant prices. This method offsets the impact of
inflationary tendency, in price level on economic growth and reflects
the real National Income. In India the base year for constant prices is
presently taken as 2004-05.
Per Capita Income: This is derived by dividing the total National
Income of a country by its total population. Therefore, an increase in
Production generate incomes which are again spent on goods and
services produced. Therefore, national income can be measured by
three methods:
1. Output or Production method
2. Income method
3. Expenditure method
1. Output or Production Method
This method is also called the value-added method. This method
approaches national income from the output side. Under this
method, the economy is divided into different sectors such as
agriculture, fishing, mining, construction, manufacturing, trade and
commerce, transport, communication and other services. Then, the
gross product is found out by adding up the net values of all the
production that has taken place in these sectors during a given year.
In order to arrive at the net value of production of a given industry,
intermediate goods purchases by the producers of this industry are
deducted from the gross value of production of that industry. The
aggregate or net values of production of all the industry and sectors
of the economy plus the net factor income from abroad will give us
the GNP. If we deduct depreciation from the GNP we get NNP at
market price. NNP at market price – indirect taxes + subsidies will
give us NNP at factor cost or National Income.
The output method can be used where there exists a census of
production for the year. The advantage of this method is that it
reveals the contributions and relative importance and of the different
sectors of the economy.
2. Income Method
This method approaches national income from the distribution side.
According to this method, national income is obtained by summing
up of the incomes of all individuals in the country. Thus, national
income is calculated by adding up the rent of land, wages and salaries
of employees, interest on capital, profits of entrepreneurs and
income of self-employed people. This method of estimating national
income has the great advantage of indicating the distribution of
national income among different income groups such as landlords,
capitalists, workers, etc.
3. Expenditure Method
16
Business, Economic Forecasting
National Income in real terms does not necessarily mean an increase
in the per capita income, as it is inversely proportional to the rate of
growth of population.
Personal Income
Personal income is the sum of all incomes actually received by all
individuals or households during a given year. In National Income
there are some income, which is earned but not actually received by
households such as Social Security contributions, corporate income
taxes and undistributed profits. On the other hand there are income
(transfer payment), which is received but not currently earned such as
old age pensions, unemployment doles, relief payments, etc. Thus, in
moving from national income to personal income we must subtract
the incomes earned but not received and add incomes received but
not currently earned.
Therefore
Personal Income = National Income – Social Security contributions –
corporate income taxes – undistributed corporate profits + transfer
payments.
Disposable Income: From personal income if we deduct personal
taxes like income taxes, personal property taxes etc. what remains is
called disposable income. Thus,
Disposable Income = Personal income – personal taxes.
Disposable Income can either be consumed or saved. Therefore,
Disposable Income = consumption + saving.
MEASUREMENT OF NATIONAL INCOME
This method arrives at national income by adding up all the
expenditure made on goods and services during a year. Thus, the
national income is found by adding up the following types of
expenditure by households, private business enterprises and the
government:
a. Expenditure on consumer goods and services by individuals and
households denoted by C. This is called personal consumption
expenditure denoted by C.
b. Expenditure by private business enterprises on capital goods and
on making additions to inventories or stocks in a year. This is called
gross domestic private investment denoted by I.
c. Government’s expenditure on goods and services i.e. government
purchases denoted by G.
d. Expenditure made by foreigners on goods and services of the
national economy over and above what this economy spends on the
output of the foreign countries i.e.
Exports – imports denoted by (X – M). Thus, GDP = C + I + G + (X – M).
India has been successful in achieving autonomy in producing
different basic and capital products since independence. Since
independence to 1980 there was restrictive growth of private sector
and government's permission was required to set up any private
enterprise in India. Other factors such as poverty and famine lowered
India's economic growth rate during this period. Post 1980s India saw
liberalization and achieved further impetus in Mid-1991.
The Industrial Policy Resolution of 1948 marked the beginning of the
evolution of the Indian Industrial Policy. In the Industrial Policy of
1948, the importance of both public sector and private sector was
accepted. However, the responsibility of development of basic
industries was handed over to Public Sector.
The Industrial Policy Resolution of 1956 gave the public sector
strategic role in the economy. It categorised industries which would
be the exclusive responsibility of the State or would progressively
come under state control and others. Earmarking the pre-eminent
position of the public sector, it envisaged private sector co-existing
with the state and thus attempted to give the policy framework
flexibility.
The main objective of the Industrial Policy of 1956 was to develop
public sector, co-operative sector and control on private monopoly.
There were four categories of industries in the Industrial Policy of
1948 which was reduced to three in the Industrial Policy of 1956.
In 1973, Joint Sector was constituted on the recommendations of
Dutta Committee. The Industrial Policy of 1980 was influenced by the
New Economic Policy is related to economic reforms. Its aim is to
bring about reforms in production pattern, to obtain new technology
and to use full capacity expeditiously and in Toto.
The New Economic Policy was devised and implemented, for the first
time in the year 1985 during the period of Prime Minister Rajiv
Gandhi. The second wave of new economic reforms came in the year
1991 during the period of P.V. Narsimha Rao government. The main
reason to start new economic policy (1991) was Gulf War and
problem of balance of payment in India.
Three main objectives of new economic policy were —Privatisation,
Liberalisation and Globalisation.
Main sectors of new economic reform policy, 1991 were — Fiscal
Policy, Monetary Policy, Value Fixation Policy Foreign Policy,
Industrial Policy, Foreign Investment Policy, Business Policy and Public
Sector Policy.
The following four main steps were taken under the Fiscal Policy,
1991:
 To control public expenditure strictly
Economic Reforms Economic Reforms were introduced in 1991 in India. First Generation Reforms were aimed at stabilisation of Indian
economy and were macro level in nature. It includes liberalisation & deregulation of industry, financial sector reforms, taxation reforms etc.
Second Generation Reforms aimed at structural changes and are micro level in nature. It will include labour reforms, land reforms, capital
market reforms, expenditure reforms and power sector reforms etc.
Since economic reform, poverty has been declining from 36% in 1993 to 26% by the end of 10th plan. But as far as inequality is concerned it
has increased. A World Bank Report 1999-2000 confirms this rise in inequality. The limit of foreign investment in some industries and Industrial
sectors were as under:
 100% FDI allowed in medical devices
 FDI cap increased in insurance & sub-activities from 26% to 49%
 100% FDI allowed in the telecom sector.
 100% FDI in single-brand retail.
 FDI in commodity exchanges, stock exchanges & depositories,
power exchanges, petroleum refining by PSUs, courier services
under the government route has now been brought under the
automatic route.
 Removal of restriction in tea plantation sector.
 Petroleum Refining by PSU (49%).
 Teleports (setting up of up-linking HUBs/Teleports), Direct to
Home (DTH), Cable Networks (Multi-system operators (MSOs)
operating at national, state or district level and undertaking
upgradation of networks towards digitalization and
addressability), Mobile TV and Headend-in-the-Sky Broadcasting
Service (HITS) – (74%).
 Cable Networks (49%).
 Broadcasting content services- FM Radio (26%), uplinking of
news and current affairs TV channels (26%).
 Print Media dealing with news and current affairs (26%).
 Air transport services- scheduled air transport (49%), non-
scheduled air transport (74%).
SECTORS REQUIRING CENTRAL GOVERNMENT APPROVAL
 Tea sector, including plantations – 100%.
 Mining and mineral separation of titanium-bearing minerals and
ores, its value addition and integrated activities -100%.
 FDI in enterprise manufacturing items reserved for small scale
sector – 100%.
17
concept of federalism and the policy of giving concession to
agriculture based industries was implemented through in it. Various
liberalised steps to be taken were declared at comprehensive level, in
the Industrial Policy declared on 24th July, 1991.
NEW ECONOMIC POLICY
 To expand Tax Net
 To observe discipline in management of funds of Central and
State governments.
 To curtail grants (subsidy)
 Under the Monetary Policy, steps were taken to control
inflation.
 Measures implemented under the Industrial Reforms Policy,
1991 were:
i. Number of reserved industries decreased to 8. Presently
these are only four.
ii. The work of rehabilitation of sick industries handed over to
Board of Industrial Financial Reconstruction.
iii. Industries were made powerful with the help of
Memorandum of Understandings (MoU)
iv. Voluntary Retirement Schemes started to cut down the size
of work force.
ECONOMIC REFORMS
RECENT POLICY MEASURES
 FDI limit raised to 74% in credit information & 100% in asset
reconstruction companies.
 FDI limit of 26% in defence sector raised to 49% under
Government approval route. Foreign Portfolio Investment up to
24% permitted under automatic route. FDI beyond 49% is also
allowed on a case to case basis with the approval of Cabinet
Committee on Security.
 Construction, operation and maintenance of specified activities
of Railway sector opened to 100% foreign direct investment
under automatic route.
SECTORS WITH CAPS
 Ground handling services – Civil Aviation (74%).
 Satellites- establishment and operation (74%).
 Private security agencies (49%).
 Private Sector Banking- Except branches or wholly owned
subsidiaries (74%).
 Public Sector Banking (20%).
 Commodity exchanges (49%).
 Credit information companies (74%).
 Infrastructure companies in securities market (49%).
 Insurance and sub-activities (49%).
 Power exchanges (49%).
 Defence (49% above 49% to CCS).
 Defence – up to 49% under FIPB/CCEA approval, beyond – 49%
under CCS approval (on a case-to-case basis, wherever it is likely
to result in access to modern and state-of-the-art technology in
the country).
 Teleports (setting up of up-linking HUBs/Teleports), Direct to
Home (DTH), Cable Networks (Multi-system operators operating
 at National or State or District level and undertaking upgradation
of networks towards digitalization and addressability), Mobile TV
and Headend-in-the Sky Broadcasting Service(HITS) – beyond
49% and up to 74%.
 Broadcasting Content Services: uplinking of news and current
affairs channels – 26%, uplinking of non-news and current affairs
TV channels – 100%.
 Publishing/printing of scientific and technical
magazines/specialty journals/periodicals – 100%.
 Print media: publishing of newspaper and periodicals dealing
with news and current affairs- 26%, Publication of Indian
editions of foreign magazines dealing with news and current
affairs- 26%.
 Terrestrial Broadcasting FM (FM Radio) – 26%.
 Publication of facsimile edition of foreign newspaper – 100%.
 Airports – brownfield – beyond 74%.
 Non-scheduled air transport service – beyond 49% and up to
74%.
 Ground-handling services – beyond 49% and up to 74%.
 Satellites – 74%.
 Private securities agencies – 49%.
 Telecom-beyond 49%.
 Single brand retail – beyond 49%.
 Asset reconstruction company – beyond 49% and up to 100%
 Banking private sector (other than WOS/Branches) – beyond
49% and up to 74%, public sector – 20%.
 Pharmaceuticals – Brownfield – 100%.

Disinvestment means to decrease the share of government in the industries.

In 1996, Disinvestment Commission was constituted to review, give suggestions and make regulations on the issue of disinvestment. Shri G.V.
Ramkrishna was the first Chairman of Disinvestment Commission. In the year 1992, National Renewal Fund was constituted for rehabilitation
of displaced labourers of sick industrial units affected due to industrial modernization, technological development etc. “Navratna” is a
company which is rising at world level. To encourage these companies, the government has given them complete autonomy. 11 such
companies have been identified. In the second phase of economic reforms programme, the main aim is to eradicate poverty from the country
and development at the rate of 7 to 8%.

FISCAL POLICY
Fiscal Policy is the policy relating to public revenue and public
expenditure and allied matters. Government spending policies that
influence macroeconomic conditions. These policies affect tax rates,
interest rates and government spending, in an effort to control the
economy. Fiscal policy is the means by which a government adjusts
its levels of spending in order to monitor and influence a nation’s
economy. Fiscal policy and monetary policy go hand in hand with
each other. Both are interdependent on each other.
TAX SYSTEM
A compulsory contribution given by a citizen or organisation to the
Government is called Tax, which is used for meeting expenses on
welfare work. Tax imposing and Tax collecting is at three levels in
India — Central level, State level and Local level. The distribution of
tax between Centre and State has been clearly mentioned in the
provisions of Indian Constitution. For rationalising it from time to
time, Finance Commission has been constituted. The tax system has
been divided into two parts:
1. Tax by Central Government — Custom Duty, Income Tax and
Corporate Tax etc.
2. Tax by State Government — The state government has right to
collect all the taxes in this category and to spend them.
There are two types of taxes:
1. Direct Taxes
2. Indirect Taxes
Direct Taxes
The taxes levied by the central government on incomes and wealth
are important direct taxes. The important taxes levied on incomes
are—corporation tax and income tax. Taxes levied on wealth are
wealth tax, gift tax etc.
Indirect Taxes
The main forms of indirect taxes are customs and excise duties and
sales tax. The central government is empowered to levy customs and
excise duties (except on alcoholic liquors and narcotics) whereas sales
tax is the exclusive jurisdiction of the state governments.
However, the union excise duties form the most significant part of
central taxes. The major tax revenue sources for states are their
shares in union excise duties and income tax, commercial taxes, land
revenue, stamp duty, registration fees, state excise duties on alcohol
and narcotics etc. Sales tax forms the most important component of
commercial taxes.
 Progressive Tax—A tax that takes away a higher proportion of
one’s income as the income rises is known as progressive tax.
Indian Income Tax is a progressive and direct tax.
 R. Chelliah Committee was constituted in August 1991 for
suggesting reforms in Tax Structure.
 Chelliah Committee recommended Income Tax for agricultural
income of more than Rs. 25,000 p.a. Chelliah Committee also
recommended for lowering down the tax rates and reducing the
tax slabs.
K.L. Rekhi Committee was constituted in 1992 for suggesting uniform
regulations for indirect taxation (Custom Duty and Excise Duty).

FINANCE COMMISSION
Finance Commission is constituted by the President under Art 280 of the constitution. Since Independence, 13 Finance Commissions have
submitted their reports. 1st Finance Commission was constituted under chairmanship of Prof. K.C. Pant while 11th Finance Commission was
constituted under chairmanship of Prof. A. M. Khusro. The recommendations of 11th Finance Commission cover period 1st April, 2000 to 31st
March, 2005.
Finance Commission Year of Establishment Chairman Operational Duration
First 1951 K. C. Neogy 1952–57
Second 1956 K. Santhanam 1957–62
Third 1960 A. K. Chanda 1962–66
Fourth 1964 P. V. Rajamannar 1966–69
Fifth 1968 Mahaveer Tyagi 1969–74
Sixth 1972 K. Brahmananda Reddy 1974–79
Seventh 1977 J. M. Shelat 1979–84
Eighth 1983 Y. B. Chavan 1984–89
Ninth 1987 N. K. P. Salve 1989–95
Tenth 1992 K. C. Pant 1995–2000
Eleventh 1998 A.M.Khusro 2000–2005

18
Twelfth 2003 C. Rangarajan 2005–2010
Thirteenth 2007 Dr. Vijay L. Kelkar 2010–2015
[3]
Fourteenth 2012 Dr. Y. V Reddy 2015–2020

IMPORTANT TAXES IMPOSED IN INDIA

1. Tax on Income and Wealth — The central government impose
different types of tax on income and wealth, viz, income tax,
corporate tax, wealth tax and gift tax. Out of them income tax and
corporate tax are more important from the revenue point of view.
2. Personal Income Tax — Personal income tax is generally imposed
on an individual combined Hindu families and total income of people
of any other communities.
3. In addition to tax, separate surcharges are also imposed some
times.
4. Agricultural income in India is free from income tax.
5. Corporate Tax — Corporate Tax is imposed on Registered
Companies and Corporations.
6. The rate of corporate tax on all companies is equal. However,
various types of rebates and exemptions have been provided.
7. Custom Duties — As per the Constitutional provisions, the central
government imposes import duty and export duty both. Import and
Export duties are not only sources of income but with the help of it
the central government regulates the foreign trade.
8. Import Duties — generally import duties are ad-velorem in India. It
means import duties are imposed on the taxable item on percentage
basis.
9. Export Duties — Export Duties are more important, compared to
Import Duties in terms of revenue and regulation of foreign trade.
10. Excise Duties — Excise duties are commodity tax as it is imposed
on production of an item and it has no relevance with its sale. This is
the largest source of revenue for the Central Government.
11. Except liquor, opium and other drugs, production of all the other
items is taxable under Central Excise Duties.

Types of Tax
Direct Tax Income Tax, Property Tax, Gift Tax etc.
Indirect Tax Sales Tax, Excise Duty, Custom Duty etc.
Taxes imposed by the Central Government Income Tax, Corporate Tax, Property Tax, Succession Tax, Wealth
Tax, Gift Tax, Custom Duty Tax on agricultural wealth etc.
Taxes imposed by the State Government Land revenue tax, Agricultural income tax, Agricultural Land
Revenue, State Excise Duty, Entertainment Tax, Stamp duty, Road
Tax, Motor Vehicle Tax etc.

The core of the budget is called the Annual financial statement. This
is the main budget document. Under article 112 of the constitution, a
statement of estimated receipts and expenditure of the Govt. of India
has to be laid before the parliament in respect of every financial year
running from April 1 to March 31 while under article 2.02 of the cost
a statement of estimated receipts and expenditures of the state
Governments has to be laid before the house of the state legislature
concerned. This statement shows the receipts and payments of Govt.
under the three parts in which Govt. accounts are kept:
(1) Consolidated Fund, (2) Contingency Fund and (3) Public Account.
 The Annual Budget of the Central Government provides
estimates of receipts and expenditures of the Government. The
Budget consists of two parts viz:
1. Revenue Budget
2. Capital Budget
Revenue Budget—all “current” ‘receipts’ such as taxation, surplus of
Public enterprises, and ‘expenditures’ of the Government.
Capital Budget—All “Capital” ‘receipts’ and ‘expenditure’ such as
domestic and foreign loans, loan repayments, foreign aid etc.
Budget Preparation
Process Budget process is a massive exercise. The exercise has
different stages and each stage kicks off at a different stage of Budget
making process. In this write-up we shall discuss finer points of
Budget making process of Government of India.
The two sides of Budget
Like our family budget, the General Budget has two major parts:
Revenue and Expenditure. Assessing the revenues from different
Central Taxes is the primary function of the Department of Revenue
and the expenditure estimates for the current and the next year for
various expenditure heads are assessed by the Department of
Expenditure. The Department of Expenditure also assesses the
resources of the Public Sector Undertakings (PSUs).
The Budget Division is a part of the Department of Economic Affairs.
Finance Secretary coordinates overall budget making process. All of
them keep the Finance Minister informed and seek directions from
BUDGET
time to time. The Chief Economic Advisor assists the concerned
departmental officer in this process.
Resources side
Leaving aside the tax receipts the other sources of the revenue which
goes into the budget are the dividends paid by the PSUs on the
government shareholdings including the interim dividends and the
capital receipts on account of the disinvestment of the government
share holdings. Besides external receipts on account borrowing from
international agencies like World Bank, ADB etc., are also estimated
and included in the assessment of the gross budgetary resources of
various programmes under various Ministries. Resources of the public
sector undertakings including their operating surplus and the
borrowings by them also constitutes an important component of the
gross budgetary resources and goes to fund their plan. General policy
is to fund the plans of the PSUs through their own resources except in
some strategic and economically vital areas where the budgetary
support is provided based on the recommendations of the Planning
Commission This assessment of the Internal and External Budgetary
Resources (IEBR) conducted by the Department of Expenditure forms
part of the total plan resources and is also reflected in the budget
documents. To estimate the earnings of PSUs, the Government
invites CMDs or the Finance Directors of PSU’s to North Block. A Joint
Secretary level officer of the Ministry of Finance holds one to one
meeting with the PSU Chairman and estimates revenue. He passes on
the information to Expenditure Secretary, who in turn, passes on the
information to Finance Secretary. This exercise starts usually in the
month of August —September. This revenue forms a part of plan
expenditure. Now comes role of the Ministries of the Government.
Each Ministry has a Financial Advisor. The Financial Advisor is called
by the Ministry of Finance and asked about the expenditure of the
amount allocated to his Ministry.
Generally, Ministries are not able to spend the allocated amount but
some may overspend as well. Based on the inputs of different
ministries Revised Estimate (RE) is prepared. Revised Estimate means
as to how much is actually required by the Ministry. As a part of the
Expenditure Management, Government has issued instructions to

19
various Ministries to adhere to the quarterly expenditure schedule
and to avoid bunching of the expenditure in the last quarter.
Additional funds are also provided in the RE stage. Important is the
estimates of the non-plan requirement for the next year. Plan
allocations are to be provided by the Planning Commission later
based on the total Gross Budgetary Support (GBS) indicated by the
Ministry of Finance. This exercise starts in the month of October-
December. As is known, the Department of Revenue, Ministry of
Finance has two Boards – Central Board of Direct Taxes (CBDT) and
Central Board of Excise and Customs (CBEC).
By mid January, these Boards give the figure of tax collection upto
December 31st. For remaining three months, tax collection is
assumed on the basis of previous trends. The Boards also estimate
the tax revenue expected in next financial year. The integrity of the
budget making depends on the realistic nature of these estimates
particularly in the face of the fiscal discipline imposed by the FRBM
Act. It is a happy development in the past two or three years the
estimates are generally not very wide off the mark.
The Expenditure side
Parallel to all these, Planning Commission goes into stock taking
mode. It starts meeting with individual Ministries in the month of
September-October and reviews ongoing schemes of the Ministries,
considers allocation for them etc. It may decide to stop some ongoing
scheme or merge two similar schemes. Thus an estimate of Plan
Budget is prepared. Planning Commission conveys to the Ministry of
Finance that it requires so many amounts to run planned schemes for
next financial year. Finance Minister and the Deputy Chairman of
Planning Commission discuss the demand in detail. This way Plan
Expenditure is ready. Different Ministries are also asked to tell about
their fund requirement, which forms a part of budget estimate. Side
by side, Department of Economic Affairs is meeting the
representatives of Trade Unions, Industry Chambers, Economists and
other groups. In budget making exercise, suggestions of different
stakeholders are kept in mind.
FM has to decide with his team
By this time, Finance Minister is in a position to estimate as to how
much it will get through taxes and how much it has to spend in
coming financial year. Finance Minister has other constraints also. He
has to abide by FRBM Act and cut fiscal deficit. Keeping in mind all
these, the Finance Minister with his team decides whether some new
taxes should be levied to collect more tax, how to widen tax net in
order to earn more revenue. While doing so the suggestions from
various interest groups are duly taken into account.
GDP assessment
The Department of Expenditure and the Department of Economic
Affairs sit to decide GDP assessment for next year. Generally a
nominal growth in GDP is projected. Actual growth in GDP is nominal
growth of GDP reduced by inflation figure.
The Budget speech of FM
Now comes the Budget speech. It is fine tuned to the last minute.
Around 15th of February, some of the budget documents are almost
ready and goes for printing to a press located in North Block itself.
Security Agencies cordons off the press and entry is almost
prohibited.
Important Terms
Appropriation Bill: It is presented to Parliament for its approval, so
that the government can withdraw from the Consolidated Fund the
amounts required for meeting the expenditure charged on the
Consolidated Fund. No amount can be withdrawn from the
Consolidated Fund till the Appropriation Bill is voted is enacted.
Capital Budget: It consists of capital receipts and payments. It also
incorporates transactions in the Public Account. It has two
components: Capital Receipt and Capital Expenditure.
Capital Expenditure: It consists of payments for acquisition of assets
like land, buildings, machinery, equipment, as also investments in
shares etc, and loans and advances granted by the Central
government to state and union territory governments, government
companies, corporations and other parties.
20
Capital Receipt: The main items of capital receipts are loans raised by
the government from public which are called market loans,
borrowings by the government from the Reserve Bank of India and
other parties through sale of Treasury Bills, loans received from
foreign governments and bodies and recoveries of loans granted by
the Central government to state and union territory governments and
other parties. It also includes proceeds from disinvestment of
government equity in public enterprises.
Central Plan: It consists of the government’s budget support to the
Plan and the internal and extra budgetary resources raised by public
enterprises.
Consolidated Fund: It is made up of all revenues received by the
government, loans raised by it, and also its receipts from recoveries
of loans granted by it. All expenditure of the government is incurred
from the Consolidated Fund and no amount can be withdrawn from
the Fund without authorisation from Parliament.
Contingency Fund: It is an imprest placed at the disposal of the
President and is used by the government to incur all its urgent and
unforeseen expenditure. Parliamentary approval for such
expenditure and for withdrawal of an equivalent amount from the
Consolidated Fund is subsequently obtained and the amount spent
from the Contingency Fund is recouped to the Fund.
Demands for Grants: It is a statement of estimates of expenditure
from the Consolidated Fund and is required to be voted by the Lok
Sabha. Generally, one Demand for Grant is presented in respect of
each ministry or department.
Expenditure Budget: It contains expenditure estimates made for a
scheme or programme under both revenue and capital heads. These
estimates are brought together and shown on a net basis at one place
by major heads.
Finance Bill: This contains the government’s proposals for levy of new
taxes, modification of the existing tax structure or continuance of the
existing tax structure beyond the period approved by Parliament. It is
submitted to Parliament along with the Budget for its approval.
Fiscal Deficit: It is the difference between the revenue receipts plus
certain no debt capital receipts and the total expenditure including
loans (net of repayments). This indicates the total borrowing
requirements of the government from all sources.
Fiscal Deficit = Revenue Receipts (net tax revenue + non-tax revenue)
± Capital Receipts (only recoveries of loans and other receipts) —
Total Expenditure (plan and non-plan)
Non-Plan Expenditure: It includes both revenue and capital
expenditure on interest payments, the entire defence expenditure
(both revenue and capital expenditure), subsidies, postal deficit,
police, pensions, economic services, loans to public enterprises and
loans as well as grants to state governments, union territory
governments and foreign governments.
Plan Expenditure: It includes both revenue and capital expenditure of
the government on the Central Plan, Central assistance to state and
union territory plans. It forms a sizeable proportion of the total
expenditure of the Central government.
Public Account: It is an account in which money received through
transactions not relating to the Consolidated Fund is kept. Besides
the normal receipts and expenditure of the government relating to
the Consolidated Fund, certain other transactions enter government
accounts in respect of which the government acts more as a banker,
for example, transactions relating to provident funds, small savings
collections, other deposits etc. Such money is kept in the Public
Account and the connected disbursements are also made from it.
Public Account funds do not belong to the government and have to
be paid back some time or the other to the persons and authorities
who deposited them. Parliamentary authorisation for payments from
the Public Account is not required.
Revenue Budget: It consists of the revenue receipts of the
government (which is Comment tax revenues plus other revenues)
and the expenditure met from these revenue It has two components:
Revenue Receipt and Revenue Expenditure.
Revenue Deficit: It refers to the excess of revenue expenditure over
revenue receipts. Revenue Expenditure: It is meant for the normal
 running of government departments and various services, interest
charges on debt incurred by the government and subsidies. Broadly
speaking, expenditure which does not result in creation of assets is
treated as revenue expenditure. All grants given to state
governments and other parties are also treated as revenue
expenditure even though some of the grants may be for creation of
assets.
Revenue Deficit = Total Revenue Expenditure — Total Revenue
Receipts or = Non-plan Expenditure + Plan Expenditure — (net tax
revenue + non tax revenue)
Revenue Receipt: It includes proceeds of taxes and other duties
levied by the Centre, interest and dividend on investments made by
the government, fees and other receipts for services rendered by the
government.
BALANCE SHEET (OVERVIEW)
The balance sheet is split into two parts:
(1) A statement of fixed assets, current assets and the liabilities
(sometimes referred to as "Net Assets")
(2) A statement showing how the Net Assets have been financed, for
example through share capital and retained profits.
The Companies Act requires the balance sheet to be included in the
published financial accounts of all limited companies. In reality, all
other organisations that need to prepare accounting information for
external users (e.g. charities, clubs, and partnerships) will also
product a balance sheet since it is an important statement of the
financial affairs of the organisation.
A balance sheet does not necessary "value" a company, since assets
and liabilities are shown at "historical cost" and some intangible
assets (e.g. brands, quality of management, market leadership) are
not included.
Asset: An asset is any right or thing that is owned by a business.
Assets include land, buildings, equipment and anything else a
business owns that can be given a value in money terms for the
purpose of financial reporting.
Liabilities: To acquire its assets, a business may have to obtain money
from various sources in addition to its owners (shareholders) or from
retained profits. The various amounts of money owed by a business
are called its liabilities.
Introduction
 Credibility of Indian economy has been re-established in the last nine
months.
 Indian economy about to take-off on a fast growth trajectory.
 Most growth forecasts have upgraded Indian economic growth while
downgrading global economic growth.
 Economically empowered States are equal partners to Indian
economic growth.
 Round the clock, round the year Government to pursue accelerated
growth, enhanced investment for the benefit of all Indians.
 After inheriting an economy with sentiments of “doom and gloom”
with adverse macroeconomic indicators, nine months have seen at
turn around, making India fastest growing large economy in the
World with a real GDP growth expected to be 7.4% (New Series).
 Stock market - Second best performing in 2014.
 Macro-economic stability and conditions for sustainable poverty
alleviation, job creation and durable double digit economic growth
have been achieved.
 Restored the trust of the people on the Government by delivering on
different areas.
Three Key achievements:
♦ Financial Inclusion - 12.5 crores families financially mainstreamed in
100 days.
♦ Transparent Coal Block auctions to augment resources of the
States.
♦ Swachh Bharat is not only a programme to improve hygiene and
cleanliness but has become a movement to regenerate India.
Game changing reforms on the anvil:
21
Long-term and Current
To provide additional information to the user, assets and liabilities
are usually classified in the balance sheet as:
Current: Those due to be repaid or converted into cash within 12
months of the balance sheet date
Long-term: Those due to be repaid or converted into cash more than
12 months after the balance sheet date
Fixed Assets
Further classification other than long-term or current is also used for
assets.
A "fixed asset" is an asset which is intended to be of a permanent
nature and which is used by the business to provide the capability to
conduct its trade.
Example: "tangible fixed assets" include plant & machinery, land &
buildings and motor vehicles. "Intangible fixed assets" may include
goodwill, patents, trademarks and brands - although they may only
be included if they have been "acquired
Investments in other companies which are intended to be held for
the long-term can also be shown under the fixed asset heading.
Capital
As well as borrowing from banks and other sources, all companies
receive finance from their owners. This money is generally available
for the life of the business and is normally only repaid when the
company is "wound up". To distinguish between the liabilities owed
to third parties and to the business owners, the latter is referred to as
the "capital" or "equity capital" of the company. In addition,
undistributed profits are re-invested in company assets (such as
stocks, equipment and the bank balance). Although these "retained
profits" may be available for distribution to shareholders - and may
be paid out as dividends as a future date - they are added to the
equity capital of the business in arriving at the total "equity
shareholders' funds". At any time, therefore, the capital of a business
is equal to the assets (usually cash) received from the shareholders
plus any profits made by the company through trading that remain
undistributed.
UNION BUDGET 2015-16
♦ Goods and Service Tax (GST)
♦ Jan Dhan, Aadhar and Mobile (JAM) - for direct benefit transfer.
State of Economy
Inflation
 Inflation declined - a structural shift
 CPI inflation projected at 5% by the end of the year,
consequently, easing of monetary policy.
 Monetary Policy Framework Agreement with RBI, to keep
inflation below 6%.
 GDP growth in 2015-16, projected to be between 8 to 8.5%.
Amrut Mahotsav
The year 2022, 75th year of Independence Vision for “Team India”
led by PM
 Housing for all - 2 crore houses in Urban areas and 4 crore
houses in Rural areas.
 Basic facility of 24x7 power, clean drinking water, a toilet and
road connectivity.
 At least one member has access to means for livelihood.
 Substantial reduction in poverty.
 Electrification of the remaining 20,000 villages including off-grid
Solar Power- by 2020.
 Connecting each of the 1,78,000 un-connected habitation.
 Providing medical services in each village and city.
 Ensure a Senior Secondary School within 5 km reach of every
child, while improving quality of education and learning
outcomes.
 To strengthen rural economy - increase irrigated area, improve
the efficiency of existing irrigation systems, and ensure value
addition and reasonable price for farm produce.
 Ensure communication connectivity to all villages.
 To make India, the manufacturing hub of the World through Skill
India and the Make in India Programmes.
 Encourage and grow the spirit of entrepreneurship - to turn
youth into job creators.
 Development of Eastern and North Eastern regions on par with
the rest of the country.
Major Challenge Ahead
 Five major challenges: Agricultural income under stress,
increasing investment in infrastructure, decline in
manufacturing, resource crunch in view of higher devolution in
taxes to states, maintaining fiscal discipline.
 To meet these challenges public sector needs to step in to
catalyse investment, make in india programme to create jobs in
manufacturing, continue support to programmes with important
national priorities such as agriculture, education, health,
MGNREGA, rural infrastructure including roads.
 Challenge of maintaining fiscal deficit of 4.1% of GDP met in
2014-15, despite lower nominal GDP growth due to lower
inflation and consequent sub-due tax buoyancy.
Fiscal Roadmap
 Government firm on journey to achieve fiscal target of 3% of
GDP.
 Realistic figures shown in fiscal account without showing
exaggerated revenue projections.
 With improved economy, pressure to accelerate fiscal
consolidation too has decreased.
 Accordingly, journey for fiscal deficit target of 3% will be
achieved in 3 years rather than 2 years. The fiscal deficit targets
are 3.9%, 3.5% and 3.0% in FY 2015-16, 2016-17 & 2017-18
respectively.
 Additional fiscal space will go to funding infrastructure
investment.
 Need to view public finances from a National perspective and
not just the perspective of the Central Government. Aggregate
public expenditure of the Governments, as a whole can be
expected to rise substantially.
 Disinvestment to include both disinvestment in loss making
units, and some strategic disinvestment.
Good Governance
 Need to cut subsidy leakages, not subsidies themselves. To
achieve this,Government committed to the process of
rationalizing subsidies.
 Direct Transfer of Benefits to be extended further with a view to
increase the number of beneficiaries from 1 crore to 10.3 crore.
Agriculture
 Major steps take to address the two major factors critical to
agricultural production, that of soil and water.
 ‘Paramparagat Krishi Vikas Yojana’ to be fully supported.
 ‘Pradhanmantri Gram Sinchai Yojana’ to provide ‘Per Drop More
Crop’.
 Rs. 5,300 crore to support micro-irrigation, watershed
development and the ‘Pradhan Mantri Krishi Sinchai Yojana’.
States urged to chip in.
 Rs. 25,000 crore in 2015-16 to the corpus of Rural Infrastructure
Development Fund (RIDF) set up in NABARD; Rs.15,000 crore for
Long Term Rural Credit Fund; Rs.45,000 crore for Short Term Co-
operative Rural Credit Refinance Fund; and Rs.15,000 crore for
Short Term RRB Refinance Fund.
 Target of Rs. 8.5 lakh crore of agricultural credit during the year
2015-16.
 Focus on improving the quality and effectiveness of activities
under MGNREGA.
22
 Need to create a National Agriculture Market for the benefit
farmers, which will also have the incidental benefit of
moderating price rises. Government to work with the States, in
NITI, for the creation of a Unified National Agriculture Market.
Funding the Unfunded
 Micro Units Development Refinance Agency (MUDRA) Bank,
with a corpus of Rs. 20,000 crores, and credit guarantee corpus
of Rs. 3,000 crores to be created.
 In lending, priority will be given to SC/ST enterprises.
 MUDRA Bank will be responsible for refinancing all Micro-
finance Institutions which are in the business of lending to such
small entities of business through a Pradhan Mantri Mudra
Yojana.
 A Trade Receivables discounting System (TReDS) which will be an
electronic platform for facilitating financing of trade receivables
of MSMEs to be established.
 Comprehensive Bankruptcy Code of global standards to be
brought in fiscal 2015-16 towards ease of doing business.
 Postal network with 1,54,000 points of presence spread across
villages to be used for increasing access of the people to the
formal financial system.
 NBFCs registered with RBI and having asset size of Rs. 500 crore
and above may be considered for notifications as ‘Financial
Institution’ in terms of the SARFAESI Act, 2002.
From Jan Dhan to jan Suraksha
 Government to work towards creating a functional social
security system for all Indians, specially the poor and the under-
privileged.
 Pradhan Mantri Suraksha Bima Yojna to cover accidental death
risk of Rs. 2 Lakh for a premium of just Rs. 12 per year.
 Atal Pension Yojana to provide a defined pension, depending on
the contribution and the period of contribution. Government to
contribute 50% of the beneficiaries’ premium limited to Rs.
1,000 each year, for five years, in the new accounts opened
before 31st December 2015.
 Pradhan Mantri Jeevan Jyoti Bima Yojana to cover both natural
and accidental death risk of Rs. 2 lakh at premium of Rs. 330 per
year for the age group of 18-50.
 A new scheme for providing Physical Aids and Assisted Living
Devices for senior citizens, living below the poeverty line.
 Unclaimed deposits of about Rs. 3,000 crores in the PPF, and
approximately Rs. 6,000 crores in the EPF corpus. The amounts
to be appropriated to a corpus, which will be used to subsidize
the premiums on these social security schemes through creation
of a Senior Citizen Welfare Fund in the Finance Bill.
 Government committed to the on-going schemes for welfare of
SCs, STs and Women.
Infrastructure
 Sharp increase in outlays of roads and railways. Capital
expenditure of public sector units to also go up.
 National Investment and Infrastructure Fund (NIIF), to be
established with an annual flow of Rs. 20,000 crores to it.
 Tax free infrastructure bonds for the projects in the rail, road
and irrigation sectors.
 PPP mode of infrastructure development to be revisited and
revitalised.
 Atal Innovation Mission (AIM) to be established in NITI to
provide Innovation
 Promotion Platform involving academicians, and drawing upon
national and international
 experiences to foster a culture of innovation , research and
development. A sum of Rs.150 crore will be earmarked.
 Concerns of IT industries for a more liberal system of raising
global capital, incubation facilities in our Centres of Excellence,
funding for seed capital and growth, and ease of Doing Business
etc. would be addressed for creating hundreds of billion dollars
in value.
 (SETU) Self-Employment and Talent Utilization) to be established
as Techno-financial, incubation and facilitation programme to
support all aspects of start-up business. Rs. 1000 crore to be set
aside as initial amount in NITI.
 Ports in public sector will be encouraged, to corporatize, and
become companies under the Companies Act to attract
investment and leverage the huge land resources.
 An expert committee to examine the possibility and prepare a
draft legislation where the need for multiple prior permission
can be replaced by a pre-existing regulatory mechanism. This will
facilitate India becoming an investment destination.
 5 new Ultra Mega Power Projects, each of 4000 MW, in the Plug-
and-Play mode.
Financial Market
 Public Debt Management Agency (PDMA) bringing both external
and domestic borrowings under one roof to be set up this year.
 Enabling legislation, amending the Government Securities Act
and the RBI Act included in the Finance Bill, 2015.
 Forward Markets commission to be merged with SEBI.
 Section-6 of FEMA to be amended through Finance Bill to
provide control on capital flows as equity will be exercised by
Government in consultation with RBI.
 Proposal to create a Task Force to establish sector-neutral
financial redressal agency that will address grievance against all
financial service providers.
 India Financial Code to be introduced soon in Parliament for
consideration.
 Vision of putting in place a direct tax regime, which is
internationally competitive on rates, without exemptions.
 Government to bring enabling legislation to allow employee to
opt for EPF or New Pension Scheme. For employee’s below a
certain threshold of monthly income, contribution to EPF to be
option, without affecting employees’ contribution.
Monesting Gold
 Gold monetisation scheme to allow the depositors of gold to
earn interest in their metal accounts and the jewellers to obtain
loans in their metal account to be introduced.
 Sovereign Gold Bond, as an alternative to purchasing metal gold
scheme to be developed.
 Commence work on developing an Indian gold coin, which will
carry the Ashok Chakra on its face.
Investment
 Foreign investments in Alternate Investment Funds to be
allowed.
 Distinction between different types of foreign investments,
especially between foreign portfolio investments and foreign
direct investments to be done away with. Replacement with
composite caps.
 A project development company to facilitate setting up
manufacturing hubs in CMLV countries, namely, Cambodia,
Myanmar, Laos and Vietnam.
Safe India
 Rs.1000 crores to the Nirbhaya Fund.
Tourism
 Resources to be provided to start work along landscape
restoration, signage and interpretation centres, parking, access
for the differently abled , visitors’ amenities, including securities
and toilets, illumination and plans for benefiting communities
around them at various heritage sites.
 Visas on arrival to be increased to 150 countries in stages.
Green India
 Target of renewable energy capacity revised to 175000 MW till
2022, comprising 100000 MW Solar, 60000 MW Wind, 10000
MW Biomass and 5000 MW Small Hydro.
 A need for procurement law to contain malfeasance in public
procurement.
23
 Proposal to introduce a public Contracts (resolution of disputes)
Bill to streamline the institutional arrangements for resolution of
such disputes.
 Proposal to introduce a regulatory reform Bill that will bring
about a cogency of approach across various sectors of
infrastructure.
Skill India
 Less than 5% of our potential work force gets formal skill training
to be employable. A national skill mission to consolidate skill
initiatives spread accross several ministries to be launched.
 Deen Dayal Upadhyay Gramin Kaushal Yojana to enhance the
employability of rural youth.
 A Committee for 100th birth celebration of Shri Deen Dayalji
Upadhyay to be announced soon.
 A student Financial Aid Authority to administer and monitor the
front-end all scholarship as well Educational Loan Schemes,
through the Pradhan Mantri Vidya Lakshmi Karyakram.
 An IIT to be set up in Karnataka and Indian School of Mines,
Dhanbad to be upgraded in to a full-fledged IIT.
 New All India Institute of Medical Science (AIIMS) to be set up in
J&K, Punjab, Tamil Nadu, Himachal Pradesh and Assam. Another
AIIMS like institutions to be set up in Bihar.
 A post graduate institute of Horticulture Research & Education is
to be set up in Amritsar.
 3 new National Institute of Pharmaceuticals Education and
Research in Maharashtra , Rajasthan & Chattisgarh and one
institute of Science and Education Research is to be set up in
Nagaland & Orissa each.
 An autonomous Bank Board Bureau to be set up to improve the
governance of public sector bank.
 The National Optical Fibre Network Programme (NOFNP) to be
further speeded up by allowing willing states to execute on
reimbursement of cost basis.
 Special assistance to Bihar & West Bengal to be provided as in
the case of Andhra Pradesh.
 Government is committed to comply with all the legal
commitments made to AP & Telengana at the time of their re-
organisation.
 Inspite of large increase in devolution to state sufficient fund
allocated to education, health, rural development, housing,
urban development, women and child development, water
resources & cleaning of Ganga.
 Part of Delhi-Mumbai Industrial Corridor (DMIC); Ahmedabad-
Dhaulera Investment region and Shendra-Bidkin Industrial Park
are now in a position to start work on basic infrastructure.
 Made in India and the Buy and the make in India policy are being
carefully pursued to achieve greater self-sufficiency in the area
of defence equipment including air-craft.
 The first phase of GIFT to become a reality very soon.
Appropriate regulations to be issued in March.
Budget Estimates
 Non-Plan expenditure estimates for the Financial Year are
estimated at Rs.13,12,200 crore.
 Plan expenditure is estimated to be Rs.4,65,277 crore, which is
very near to the R.E. of 2014-15.
 Total Expenditure has accordingly been estimated at Rs.
17,77,477 crore.
 The requirements for expenditure on Defence, Internal Security
and other necessary expenditures are adequately provided.
 Gross Tax receipts are estimated to be Rs. 14,49,490 crore.
 Devolution to the States is estimated to be Rs. 5,23,958.
 Share of Central Government will be Rs. 9,19,842.
 Non Tax Revenues for the next fiscal are estimated to be Rs.
2,21,733 crore.
 Fiscal deficit will be 3.9 per cent of GDP and Revenue Deficit will
be 2.8 per cent of GDP.
Tax Proposal
 Objective of stable taxation policy and a non-adversarial tax
administration.
 Fight against the scourge of black money to be taken forward.
 Efforts on various fronts to implement GST from next year.
 No change in rate of personal income tax.
 Proposal to reduce corporate tax from 30% to 25% over the next
four years, starting from next financial year.
 Rationalisation and removal of various tax exemptions and
incentives to reduce tax disputes and improve administration.
 Exemption to individual tax payers to continue to facilitate
savings. Broad themes :
 Measures to curb black money;
 Job creation through revival of growth and investment and
promotion of domestic manufacturing – “Make in India” ;
 Improve ease of doing business - Minimum Government and
maximum governance;
 Improve quality of life and public health – Swachh Bharat;
 Benefit to middle class tax-payers; and
 Stand alone proposals to maximise benefit to the economy.
Black Money
 Generation of black money and its concealment to be dealt with
effectively and forcefully.
 Investigation into cases of undisclosed foreign assets has been
given highest priority in the last nine months.
 Major breakthrough with Swiss authorities, who have agreed to:
o Provide information in respect of cases independently
investigated by IT department;
o Confirm genuineness of bank accounts and provide
non-banking information;
o Provide such information in time-bound manner; and
o Commence talks for automatic exchange of
information.
 New structure of electronic filing of statements by reporting
entities to ensure seamless integration of data for more
effective enforcement.
 Bill for a comprehensive new law to deal with black money
parked abroad to be introduced in the current session.
Key features of new law on black money:
o Evasion of tax in relation to foreign assets to have a
punishment of rigorous imprisonment upto 10 years, be
non-compoundable, have a penalty rate of 300% and the
offender will not be permitted to approach the Settlement
Commission.
o Non-filing of return/filing of return with inadequate
disclosures to have a punishment of rigorous imprisonment
upto 7 years.
o Undisclosed income from any foreign assets to be taxable
at the maximum marginal rate.
o Mandatory filing of return in respect of foreign asset.
o Entities, banks, financial institutions including individuals all
liable for prosecution and penalty.
o Concealment of income/evasion of income in relation to a
foreign asset to be made a predicate offence under PML
Act, 2002.
o PML Act, 2002 and FEMA to be amended to enable
administration of new Act on black money.
o Benami Transactions (Prohibition) Bill to curb domestic
black money to be introduced in the current session of
Parliament.
o Acceptance or re-payment of an advance of ` 20,000 or
more in cash for purchase of immovable property to be
prohibited.
o PAN being made mandatory for any purchase or sale
exceeding Rupees 1 lakh.
o Third party reporting entities would be required to furnish
information about foreign currency sales and cross border
transactions.
o Provision to tackle splitting of reportable transactions.
o Leverage of technology by CBDT and CBEC to access
information from either’s data bases.
Make in India
24
 Revival of growth and investment and promotion of domestic
manufacturing for job creation.
 Tax “pass through” to be allowed to both category I and
category II alternative investment funds.
 Rationalisation of capital gains regime for the sponsors exiting at
the time of listing of the units of REITs and InvITs.
 Rental income of REITs from their own assets to have pass
through facility.
 Permanent Establishment (PE) norm to be modified to
encourage fund managers to relocate to India.
 General Anti Avoidance Rule (GAAR) to be deferred by two
years.
 GAAR to apply to investments made on or after 01.04.2017,
when implemented.
 Additional investment allowance (@ 15%) and additional
depreciation (@35%) to new manufacturing units set up during
the period 01-04-2015 to 31-03-2020 in notified backward areas
of Andhra Pradesh and Telangana.
 Rate of Income-tax on royalty and fees for technical services
reduced from 25% to 10% to facilitate technology inflow.
 Benefit of deduction for employment of new regular workmen
to all business entities and eligibility threshold reduced.
 Basic Custom duty on certain inputs, raw materials, inter
mediates and components in 22 items, reduced to minimise the
impact of duty inversion.
 All goods, except populated printed circuit boards for use in
manufacture of ITA bound items, exempted from SAD.
 SAD reduced on import of certain inputs and raw materials.
 Excise duty on chassis for ambulance reduced from 24% to
12.5%.
 Balance of 50% of additional depreciation @ 20% for new plant
and machinery
 installed and used for less than six months by a manufacturing
unit or a unit engaged in generation and distribution of power is
to be allowed immediately in the next year.
Minimum Governement Maximum Governance
 Simplification of tax procedures.
 Monetary limit for a case to be heard by a single member bench
of ITAT increase from Rs. 5 lakh to Rs. 15 lakh.
 Penalty provision in indirect taxes are being rationalised to
encourage compliance and early dispute resolution.
 Central excise/Service tax assesses to be allowed to use digitally
signed invoices and maintain record electronically.
 Wealth-tax replaced with additional surcharge of 2 per cent on
super rich with a taxable income of over Rs. 1 crore annually.
 Provision of indirect transfers in the Income-tax Act suitably
cleaned up.
 Applicability of indirect transfer provisions to dividends paid by
foreign companies to their shareholders to be addressed
through a clarificatory circular.
 Domestic transfer pricing threshold limit increased from Rs. 5
crore to Rs. 20 crore. MAT rationalised for FIIs and members of
an AOP.
 Tax Administration Reform Commission (TARC)
recommendations to be appropriately implemented during the
course of the year.
 Education cess and the Secondary and Higher education cess to
be subsumed in Central Excise Duty.
 Specific rates of central excise duty in case of certain other
commodities revised.
 Excise levy on cigarettes and the compounded levy scheme
applicable to pan masala, gutkha and other tobacco products
also changed.
 Excise duty on footwear with leather uppers and having retail
price of more than Rs. 1000 per pair reduced to 6%. Online
central excise and service tax registration to be done in two
working days.
 Time limit for taking CENVAT credit on inputs and input services
increased from 6 months to 1 year.
 Service-tax plus education cesses increased from 12.36% to 14%
to facilitate transition to GST.
 Donation made to National Fund for Control of Drug Abuse
(NFCDA) to be eligible for 100% deduction u/s 80G of Income-tax
Act. Seized cash can be adjusted towards assessees tax liability.
Swachh Bharat
 100% deduction for contributions, other than by way of CSR
contribution, to Swachh Bharat Kosh and Clean Ganga Fund.
 Clean energy cess increased from Rs. 100 to Rs. 200 per metric
tonne of coal, etc. to finance clean environment initiatives.
 Excise duty on sacks and bags of polymers of ethylene other
than for industrial use increased from 12% to 15%.
 Enabling provision to levy Swachh Bharat cess at a rate of 2% or
less on all or certain services , if need arises. Services by
common affluent treatment plant exempt from Service-tax.
 Concessions on custom and excise duty available to electrically
operated vehicles and hybrid vehicles extended upto
31.03.2016.
Benefits to middle class tax-payers
 Limit of deduction of health insurance premium increased from
Rs.15000 to Rs. 25000, for senior citizens limit increased from
Rs. 20000 to Rs. 30000.
 Senior citizens above the age of 80 years, who are not covered
by health insurance, to be allowed deduction of Rs. 30000
towards medical expenditures.
 Deduction limit of Rs. 60000 with respect to specified decease of
serious nature enhanced to Rs. 80000 in case of senior citizen.
 Additional deduction of Rs.25000 allowed for differently abled
persons. Limit on deduction on account of contribution to a
pension fund and the new pension scheme increased from Rs. 1
lakh to Rs. 1.5 lakh.
 Additional deduction of Rs. 50000 for contribution to the new
pension scheme u/s 80CCD.
 Payments to the beneficiaries including interest payment on
deposit in Sukanya Samriddhi scheme to be fully exempt.
 Service-tax exemption on Varishtha Bima Yojana.
 Concession to individual tax-payers despite inadequate fiscal
space. Lot to look forward to as fiscal capacity improves.
 Conversion of existing excises duty on petrol and diesel to the
extent of Rs. 4 per litre into Road Cess to fund investment.
 Service Tax exemption extended to certain pre cold storage
services in relation to fruits and vegetables so as to incentivise
value addition in crucial sector.
 Negative List under service-tax is being slightly pruned to widen
the tax base.
 Yoga to be included within the ambit of charitable purpose
under Section 2(15) of the Income-tax Act.
 To mitigate the problem being faced by many genuine charitable
institutions, it is proposed to modify the ceiling on receipts from
The Current Economic Situation and The Challenges
 Decisive vote for change represents the desire of the people to
grow, free themselves from the curse of poverty and use the
opportunity provided by the society. Country in no mood to
suffer unemployment, inadequate basic amenities, lack of
infrastructure and apathetic governance.
 Challenging situation due to Sub five per cent growth and double
digit inflation.
 Continued slow-down in many emerging economies a threat to
sustained global recovery.
 Recovery seen with the growth rate of world economy projected
at 3.6 per cent in 2014 vis-a-vis in 2013.
 First budget of this NDA government to lay down a broad policy
indicator of the direction in which we wish to take this country.
 Steps announced are only the beginning of the journey towards
a sustained growth of 7-8 per cent or above within the next 3-4
years along with macro-economic stabilization.
25
activities in the nature of trade, commerce or business to 20% of
the total receipts from the existing ceiling of Rs. 25 lakh.
 Most provisions of Direct Taxes Code have already been included
in the Income-tax Act, therefore, no great merit in going ahead
with the Direct Taxes Code as it exists today.
 Direct tax proposals to result in revenue loss of Rs. 8315 crore,
whereas the proposals in indirect taxes are expected to yield Rs.
23383 crore.
 Thus, the net impact of all tax proposals would be revenue gain
of Rs. 15068 crore.
Other
 Increase in basic custom duty:
 Metallurgical coke from 2.5 % to 5%.
 Tariff rate on iron and steel and articles of iron and steel
increased from 10% to 15%.
 Tariff rate on commercial vehicle increased from 10 % to 40%.
 Basic custom duty on digital still image video camera with
certain specification reduced to nil.
 Excise duty on rails for manufacture of railway or tram way track
construction material exempted retrospectively from 17-03-
2012 to 02- 02-2014, if not CENVAT credit of duty paid on such
rails is availed.
 Service-tax to be levied on service provided by way of access to
amusement facility, entertainment events or concerts, pageants,
non recognised sporting events etc.
Service-tax exemption
 Services of pre-conditioning, pre-cooling, ripening etc. of fruits
and vegetables.
 Life insurance service provided by way of Varishtha Pension
Bima Yojana.
 All ambulance services provided to patients.
 Admission to museum, zoo, national park, wile life sanctuary and
tiger reserve.
 Transport of goods for export by road from factory to land
customs station.
 Enabling provision made to exclude all services provided by the
Government or local authority to a business entity from the
negative list.
 Service-tax exemption to construction, erection, commissioning
or installation of original works pertaining to an airport or port
withdrawn.
 Transportation of agricultural produce to remain exempt from
Service-tax.
 Artificial heart exempt from basic custom duty of 5% and CVD.
 Excise duty exemption for captively consumed intermediate
compound coming into existance during the manufacture of
agarbathi
UNION BUDGET 2014-15
 Growing aspirations of people will be reflected in the
development strategy of the Government led by the Prime
minister Shri Narendra Modi and its mandate of “Sab ka Saath
Sab ka Vikas”.
 Need to revive growth in manufacturing and infrastructure
sectors.
 Tax to GDP ratio must be improved and Non-tax revenues
increased.
Deficit and Inflation
 Decline in fiscal deficit from 5.7% in 2011-12 to 4.5% in 2013-14
mainly achieved,by reduction in expenditure rather than by way
of realization of higher revenue.
 Improvement in current account deficit from 4.7 % in 2012-13 to
yearend level of 1.7% mainly achieved through restriction on
non-essential import and slow-down in overall aggregate
demand. Need to keep watch on CAD.
 4.1 per cent fiscal deficit a daunting task in the backdrop of two
years of low GDP growth, static industrial growth, moderate
 increase in indirect taxes, subsidy burden and not so
encouraging tax buoyancy.
 The government is committed to achieve this target. Road map
for fiscal consolidation outlines fiscal deficit of 3.6 % for 2015-16
and 3 % for 2016- 17.
 Inflation has remain at elevated level with gradual moderation in
WPI recently. The problem of black money must be fully
addressed.
 Bold steps required to enhance economic activities and spur
growth in the economy.
Administrative Initiatives
 Sovereign right of the Government to undertake retrospective
legislation to be exercised with extreme caution and
judiciousness keeping in mind the impact of each such measure
on the economy and the overall investment climate.
 A stable and predictable taxation regime which will be investor
friendly and spur growth.
 Legislative and administrative changes to sort out pending tax
demands of more than 4 lakh crore under dispute and litigation.
 Resident tax payers enabled to obtain on advance ruling in
respect of their income-taxliability above a defined threshold.
 Measures for strengthening the Authority for Advance Rulings.
Income-tax Settlement Commission scope to be enlarged.
National Academy for Customs & Excise at Hindupur in Andhra
Pradesh.
 The subsidy regime to be made more targeted for full protection
to the marginalized,poor and SC/ST.
 New Urea Policy would be formulated.
 Introduction of GST to be given thrust.
 High level committee to interact with trade and industry on
regular basis to ascertain areas requiring clarity in tax laws is
required to be set up.
 Convergance with International Financial Reporting Standard
(IFRS) by Adoption of the new Indian Accounting Standards (2nd
AS) by Indian Companies.
 Setting up of Expenditure Management Commission to look into
expenditure reforms.
 Employment exchanges to be transformed into career centres. A
sum of 100 crore provided.
Economic Initiatives
Foreign Direct Investment (FDI)
 Government to promote FDI selectively in sectors.
 The composite cap of foreign investment to be raised to 49 per
cent with full Indian management and control through the FIPB
route.
 The composite cap in the insurance sector to be increased up to
49 per cent from 26 per cent with full Indian management and
control through the FIPB route.
 Requirement of the built up area and capital conditions for FDI
to be reduced from 50,000 square metres to 20,000 square
metres and from USD 10 million to USD 5million respectively for
development of smart cities.
 The manufacturing units to be allowed to sell its products
through retail including Ecommerce platforms.
Bank Capitalization
 Requirement to infuse 2,40,000 crore as equity by 2018 in our
banks to be in line with Basel-III norms.
 Capital of banks to be raised by increasing the shareholding of
the people in a phased manner.
 PSU Capital Expenditure PSUs will invest through capital
investment a total sum of 2,47,941 crores in the current financial
year.
Smart Cities
 A sum of 7060 crore is provided in the current fiscal for the
project of developing ‘one hundred Smart Cities’.
Real Estate
 Incentives for Real Estate Investment Trusts (REITS). Complete
pass through for the purpose of taxation.
26
 A modified REITS type structure for infrastructure projects as the
Infrastructure Investment Trusts (INVITS).
 These two instruments to attract long term finance from foreign
and domestic sources including the NRIs.
Irrigation
 1000 crore provided for “Pradhan Mantri Krishi Sinchayee
Yojna” for assured irrigation.
Rural Development
 Shyama Prasad Mukherji Rurban Mission for integrated project
based infrastructure in the rural areas.
 500 crore for “Deen Dayal Upadhyaya Gram Jyoti Yojana” for
feeder separation to augment power supply to the rural areas.
 14,389 crore provided for Pradhan Mantri Gram Sadak
Yojna(PMGSY) .
 More productive, asset creating and with linkages to agriculture
and allied activities wage employment would to be provided
under MGNREGA.
 Under Ajeevika, the provision of bank loan for women SHGs at
4% to be extended to another 100 districts.
 Initial sum of 100 crore for “Start Up Village Entrepreneurship
Programme” for encouraging rural youth to take up local
entrepreneurship programs .
 Allocation for National Housing Bank increased to 8000 crore to
support Rural housing.
 New programme “Neeranchal” to give impetus to watershed
development in the country with an initial outlay of 2142 crores.
 Backward Region Grant Fund (BRGF) to be restructured to
address intra-district inequalities.
Scheduled Caste/Scheduled Tribe
 An amount of 50,548 crore is proposed under the SC Plan and
32,387 crore under TSP.
 For the welfare of the tribals “Van Bandhu Kalyan Yojna”
launched with an initial allocation of 100 crore.
Senior Citizen & Differently Abled Persons
 Varishtha Pension Bima Yojana (VPBY) to be revived for a limited
period from 15 August, 2014 to 14 August, 2015 for the benefit
of citizens aged 60 years and above.
 A committee will to examine and recommend how unclaimed
amounts with PPF, Post Office, saving schemes etc. can be used
to protect and further financial interests of the senior citizens?
 Government notified a minimum pension of 1000 per month to
all subscriber members of EP Scheme. Initial provision of 250
crore.
 Increase in mandatory wage ceiling of subscription to 15000. A
provision of 250 crore in the current budget.
 EPFO to launch the “Uniform Account Number” Service for
contributing members.
 Scheme for Assistance to Disabled Persons for purchase/fitting
of Aids and Appliances (ADIP) extended to include contemporary
aids and assistive devices.
 National level institutes for Universal Inclusive Design , Mental
Health Rehabilitation and a Centre for Disability Sports to be
established.
 Assistance to State Governments to establish fifteen new Braille
Presses and modernize ten existing Braille Presses.
 Government to print currency notes with Braille like signs for
visibly challenged persons.
Women & Child Development
 Outlay of 50 crores for pilot testing a scheme on “Safety for
Women on Public Road Transport”.
 Sum of 150 crores on a scheme to increase the safety of women
in large cities.
 “Crisis Management Centres” in all the districts of NCT of Delhi
this year government and private hospitals.
 A sum of 100 crore is provided for “Beti Bachao, Beti Padhao
Yojana”, a focused scheme to generate awareness and help in
improving the efficiency of delivery of welfare services meant for
women.
 School curriculum to have a separate chapter on gender
mainstreaming.
Drinking Water & Sanitation
 20,000 habitations affected with arsenic, fluoride, heavy/ toxic
elements, pesticides/fertilizers to be provided safe drinking
water through community water purification plants in next 3
years.
 “Swachh Bharat Abhiyan” to cover every household with
sanitation facility by the year 2019.
Health and Family Welfare
 Free Drug Service and Free Diagnosis Service to achieve “ Health
For All” Two National Institutes of Ageing to be set up at AIIMS,
New Delhi and Madras Medical College, Chennai.
 A national level research and referral Institute for higher dental
studies to be set up. AIIMS like institutions in Andhra Pradesh,
West Bengal, Vidarbha in Maharashtra and Poorvanchal in UP.
 A provision of 500 crores made. 12 new government medical
colleges to be set up.
 States Drug Regulatory and Food Regulatory Systems to be
strengthened by creating new drug testing laboratories and
strengthening the 31 existing State laboratories.
 15 Model Rural Health Research Centres to be set up for
research on local health issues concerning rural population.
 A national programme in Mission Mode to halt the deteriorating
malnutrition situation in India to be put in place within six
months
Education
School Education
 Government would strive to provide toilets and drinking water in
all the girls school in first phase. An amount of 28635 crore is
being funded for Sarv Shiksha Abhiyan(SSA) and 4966 crore for
Rashtriya madhyamic Shiksha Abhiyan (RMSA).
 A School Assessment Programme is being initiated at a cost of 30
crore.
 500 crore provided for “Pandit Madan Mohan Malviya New
Teachers Training Programme” to infuse new training tools and
motivate teachers.
 100 crore provided for setting up virtual classrooms as
Communication Linked.Interface for Cultivating Knowledge
(CLICK) and online courses.
Higher Education
 Jai Prakash Narayan National Centre for Excellence in Humanities
to be set up in MP.
 500 crore provided for setting up 5 more IITs in the Jammu,
Chhattisgarh, Goa,Andhra Pradesh and Kerala.
 5 IIMs in the States of HP, Punjab, Bihar, Odisha and Rajasthan.
 Simplification of norms to facilitate education loans for higher
studies.
Information Technology
 Pan India programme “Digital India” to with an outlay of 500
crore to be launched.
 Programme for promoting “Good Governance” to be launched .
A sum of 100 crore provided.
Information and Broadcasting
 100 crore allocated for 600 new and existing Community Radio
Stations.
 Film & Television Institute, Pune and Satyajit Ray Film &
Television Institute, Kolkata are proposed to be accorded status
of Institutes of national importance and a National Centre for
Excellence in Animation, Gaming and Special Effects to be set up.
 100 crore is provided for Kisan TV, to disseminate real time
information to the farmers on issues such as new farming
techniques, water conservation, organic farming etc.
Urban Development
 Vision of the Government is that 500 urban habitations to be
provided support for renewal of infrastructure and services in
next 10 years through PPPs.
27
 Present corpus of Pooled Municipal Debt Obligation Facility
facility to be enlarged to 50,000 Crore from 5000 crore.
 100 crore provided for Metro Projects in Lucknow and
Ahemdabad.
Housing
 Extended additional tax incentive on home loans shall be
provided to encourage people, especially the young, to own
houses.
 Mission on Low Cost Affordable Housing anchored in the
National Housing Bank to be set up.
 A sum of 4000 crores for NHB from the priority sector lending
shortfall with a view to increase the flow of cheaper credit for
affordable housing to the urban poor/EWS/LIG segment is
provided.
 Slum development to be included in the list of Corporate Social
Responsibility (CSR) activities to encourage the private sector to
contribute more.
Minorities
 A programme for the up gradation of skills and training in
ancestral arts for development for the minorities “Up gradation
of Traditional Skills in Arts, Resources and Goods” to be
launched.
 An additional amount of 100 crores for Modernization of
Madarsas. .
Agriculture
 Government to establish two more Agricultural Research
Institute of excellence in Assam and Jharkhand with an initial sum
of 100 crore.
 An amount of 100 crores set aside for “Agri-tech Infrastructure
Fund”.
 200 crore provided to open Agriculture Universities in Andhra
Pradesh and Rajasthan and Horticulture Universities in Telangana
and Haryana.
 A scheme to provide every farmer a soil health card in a Mission
mode will be launched. 100 crore has been provided for this
purpose and additional 56 crores to set up100 Mobile Soil Testing
Laboratories across the country.
 To meet the vagaries of climate change a “National Adaptation
Fund” with an initial sum an amount of 100 crore will be set up.
 A sustainable growth of 4% in Agriculture will be achieved.
 Technology driven second green revolution with focus on higher
productivity and including “Protein revolution” will be area of
major focus.
 To mitigate the risk of Price volatility in the agriculture produce, a
sum of 500 crore is provided for establishing a “Price Stabilization
Fund”.
 Central Government to work closely with the State Governments
to re-orient their respective APMC Acts.
 Sum of 50 crores provided for the development of indigenous
cattle breeds and an equal amount for starting a blue revolution
in inland fisheries.
 Transformation plan to invigorate the warehousing sector and
significantly improve post-harvest lending to farmers.
Agriculture Credit
 To provide institutional finance to landless farmers, it is proposed
to provide finance to 5 lakh joint farming groups of “Bhoomi
Heen Kisan” through NABARD .
 A target of 8 lakh crore has been set for agriculture credit during
2014-15.
 Corpus of Rural Infrastructure Development Fund (RIDF) raised
by an additional 5000 crores from the target given in the Interim
Budget to 25000 crores .
 Allocation of 5,000 crore provided for the Warehouse
Infrastructure Fund.
 “Long Term Rural Credit Fund” to set up for the purpose of
providing refinance support to Cooperative Banks and Regional
Rural Banks with an initial corpus of 5,000 crore.
 Amount of 50,000 crore allocated for Short Term Cooperative
Rural Credit .
 Sum of 200 crore for NABARD’s Producers Development and
Upliftment Corpus (PRODUCE) for building 2,000 producers
organizations over the next two years.
Food Security
 Restructuring FCI, reducing transportation and distribution losses
and efficacy of PDS to be taken up on priority.
 Government committed to provide wheat and rice at reasonable
prices to the weaker sections of the society.
 Government when required will undertake open market sales to
keep prices under control.
Industry
 Central Government Departments and Ministries to integrate
their services with the e-Biz -a single window IT platform- for
services on priority by 31 December this year.
 100 crore provided for setting up a National Industrial Corridor
Authority.
 Amritsar Kolkata Industrial master planning to be completed
expeditiously.
 Master planning of 3 new smart cities in the Chennai-Bengaluru
Industrial Corridor region, viz., Ponneri in Tamil Nadu,
Krishnapatnam in Andhra Pradesh and Tumkur in Karnataka to be
completed.
 Perspective plan for the Bengaluru Mumbai Economic corridor
(BMEC) and Vizag-Chennai corridor to be completed with the
provision for 20 new industrial clusters.
 Development of industrial corridors with emphasis on Smart
Cities linked to transport connectivity to spur growth in
manufacturing and urbanization will be accelerated.
 Proposed to establish an Export promotion Mission to bring all
stakeholders under one umbrella.
 Apprenticeship Act to be suitably amended to make it more
responsive to industry and youth.
Micro Small and Medium Enterprises (MSME) Sector
 Skill India to be launched to skill the youth with an emphasis on
Comment employability and entrepreneur skills.
 Committee to examine the financial architecture for MSME
Sector, remove bottlenecks and create new rules and structures
to be set up and give concrete suggestions in three months.
 Fund of Funds with a corpus of 10,000 crore for providing equity
through venture capital funds, quasi equity, soft loans and other
risk capital specially to encourage new startups by youth to be
set up.
 Corpus of 200 crore to be set up to establish Technology Centre
Network.
 Definition of MSME to be reviewed to provide for a higher capital
ceiling.
 Programme to facilitate forward and backward linkages with
multiple value chain of manufacturing and service delivery to be
put in place.
 Entrepreneur friendly legal bankruptcy framework will be
developed for SMEs to enable easy exit.
 A nationwide “District level Incubation and Accelerator
Programme” to be taken up for incubation of new ideas and
necessary support for accelerating entrepreneurship.
Textiles
 50 crore is provided to set up a Trade Facilitation Centre and a
Crafts Museum to develop and promote handloom products and
carry forward the rich tradition of handlooms of Varanasi.
 Sum of 500 crore for developing a Textile mega-cluster at
Varanasi and six more at Bareilly, Lucknow, Surat, Kutch,
Bhagalpur and Mysore. 2
 0 crore to set up a Hastkala Academy for the preservation,
revival, and documentation of the handloom/handicraft sector in
PPP mode in Delhi.
 50 crore is provided to start a Pashmina Promotion Programme
(P- 3) and development of other crafts of Jammu & Kashmir.
 retirement plan
28
Infrastructure
 An institution to provide support to mainstreaming PPPPs called
4PIndia to be set up with a corpus of 500 crores.
Shipping
 11635 crore will be allocated for the development of Outer
Harbour Project in Tuticorin for phase I.
 SEZs will be developed in Kandla and JNPT.
 Comprehensive policy to be announced to promote Indian ship
building industry.
Inland Navigation
 Project on Ganges called “ Jal Marg Vikas’ to be developed
between Allahabad and Haldia.
New Airports
 Scheme for development of new airports in Tier I and Tier II Cities
to be launched.
Roads sector
 Sector needs huge amount of investment along with
debottlenecking from maze of clearances.
 An investment of an amount of 37,880 crores in NHAI and State
Roads is proposed which includes 3000 crores for the North East.
 Target of NH construction of 8500 km will be achieved in current
financial year. Work on select expressways in parallel to the
development of the Industrial Corridors will be initiated. For
project preparation NHAI shall set aside a sum of 500 crore.
Energy
 100 crore is allocated for a new scheme “Ultra-Modern Super
Critical Coal Based Thermal Power Technology.”
 Comprehensive measures for enhancing domestic coal
production are being put in place.
 Adequate quantity of coal will be provided to power plants
which are already commissioned or would be commissioned by
March 2015.
 An exercise to rationalize coal linkages to optimize transport of
coal and reduce cost of power is underway.
New & Renewable Energy
 500 crores provided for Ultra Mega Solar Power Projects in
Rajasthan, Gujarat,Tamil Nadu, Andhra Pradesh and Laddakh.
 400 crores provided for a scheme for solar power driven
agricultural pump sets and water pumping stations.
 100 crore provided for the development of 1 MW Solar Parks on
the banks of canals.
 A Green Energy Corridor Project is being implemented to
facilitate evacuation of renewable energy across the country.
Petroleum & Natural Gas
 Production and exploitation of Coal Bed Methane reserves will
be accelerated.
 Possibility of using modern technology to revive old or closed
wells to be explored.
 Usage of PNG to be rapidly scaled up in a Mission mode.
 Proposal to develop pipelines using appropriate PPP models.
Mining
 Changes, if necessary, in the MMDR Act, 1957 to be introduced
to encourage investment in mining sector and promote
sustainable mining practices.
Financial Sector
Capital Market
 Ongoing process of consultations with all the stakeholders on
the enactment of the Indian Financial Code and reports of the
Financial Sector Legislative Reforms Commission (FSLRC) to be
completed.
 Government in close consultation with the RBI to put in place a
modern monetary policy framework.
 Following measures will be taken to energize Capital markets.
 Introduction of uniform KYC norms and inter-usability of the KYC
records across the entire financial sector.
 Introduce one single operating demat account.
 Uniform tax treatment for pension fund and mutual fund linked

Banking and Insurance Sector
Banking
 Time bound programme as Financial Inclusion Mission to be
launched on 15 August this year with focus on the weaker
sections of the society.
 Banks to be encouraged to extend long term loans to
infrastructure sector with flexible structuring.
 Banks to be permitted to raise long term funds for lending to
infrastructure sector with minimum regulatory pre-emption such
as CRR, SLR and Priority Sector Lending (PSL).
 RBI to create a framework for licensing small banks and other
differentiated banks.
 Differentiated banks serving niche interests, local area banks,
payment banks etc. are contemplated to meet credit and
remittance needs of small businesses, unorganized sector, low
income households, farmers and migrant work force.
 Six new Debt Recovery Tribunals to be set up.
 For venture capital in the MSME sector, a 10,000 crore fund to
act as a catalyst to attract private Capital by way of providing
equity quasi equity, soft loans and other risk capital for start-up
companies with suitable tax incentives to participating private
funds to be established.
Insurance Sector
 The pending insurance laws (amendment) Bill to be immediately
brought for consideration of the Parliament
 The regulatory gap under the Prize Chits and Money Circulation
Scheme (Banking)Act, 1978 will be bridged.
Small Savings Kissan
 Vikas Patra (KVP) to be reintroduced.
 A special small savings instrument to cater to the requirements
of educating and marriage of the Girl Child to be introduced.
 A National Savings Certificate with insurance cover to provide
additional benefits for the small saver.
 In the PPF Scheme, annual ceiling will be enhanced to 1.5 lakh
p.a. from 1 lakh at present.
Defence & Internal Security
 A further sum of 1000 crore to meet requirement for “One Rank
One Pension”.
 Capital outlay for Defence increased by 5000 crore including a
sum of 1000 crore for accelerating the development of the
Railway system in the border areas.
 Urgent steps would also be taken to streamline the procurement
process to make it speedy and more efficient.
 crore is provided for construction of a war memorial in the
Princes Park, which will be supplemented by a War Museum. I
am allocating a sum of 100 crore for this purpose.
 100 crore is provided to set up a Technology Development Fund
for Defence.
Internal Security
 3000 crore is provided in the current financial year for
modernization of state police forces.
 Adequate allocation for Additional Central Assistance for Left
Wing Extremist Affected districts..
 2250 crore provided to strengthen and modernize border
infrastructure.
 990 crore allocated for the socio economic development of the
villages along the borders.
 A sum of 150 crore ear-marked for the construction of Marine
Police Station, Jetties and for the purchase of boats etc. 50
crores provided for construction of National Police Memorial.
Culture & Tourism
 200 crore provided to build the Statue of unity(National project).
 Facility of Electronic Travel Authorization (e-Visa) to be
introduced in phased manner at nine airports in India.
 Countries to which the Electronic Travel authorisation facility
would be extended would be identified in a phased manner.
29
 500 crore provided for developing 5 tourist circuits around
specific themes.
 100 crore provided for National Mission on Pilgrimage
Rejuvenation and Spiritual Augmentation Drive (PRASAD).
 200 crore provided for National Heritage City Development and
Augmentation Yojana (HRIDAY).
 100 crore provided for Archaeological sites preservation.
 Sarnath-Gaya-Varanasi Buddhist circuit to be developed with
world class tourist amenities to attract tourists from all over the
world.
Water Resources and cleaning of Ganga
 100 crore provided for Detailed Project Reports for linking of
rivers.
 2037 crores provided for Integrated Ganga Conservation Mission
“NAMAMIGANGE”.
 100 crore provided for Ghat development and beautification at
Kedarnath, Haridwar,Kanpur, Varanasi, Allahabad, Patna and
Delhi.
 NRI Fund for Ganga will be set up.
Science and Technology
 Government to strengthen at least five institutions as Technical
Research Centres.
 Development of Biotech clusters in Faridabad and Bengaluru.
 Nascent agri-biotech cluster in Mohali to be scaled up. In
addition, two new clusters,in Pune and Kolkata to be
established.
 Global partnerships will be developed under India’s leadership to
transform the Delhi component of the International Centre for
Genetic Engineering and Biotechnology (ICGEB) into a world-
leader in life sciences and biotechnology.
 Several major space missions planned for 2014-15.
Sports and Youth Affairs
 200 crore provided for upgrading the indoor and outdoor sports
stadiums in Jammu and Kashmir Valley to international
standards.
 100 crore provided for sports university in Manipur.
 India to start an annual event to promote Unique sports
traditions in the Himalayan region games.
 100 crore provided for the training of sports women and men for
forthcoming Asian games.
 A “Young Leaders Programme” with an initial allocation of 100
crore to be set up.
North Eastern States
 100 crore provided for development of organic farming in North
Eastern States.
 1000 crore provided for development of rail connectivity in the
North Eastern Region.
 To provide a strong platform to rich cultural and linguistic
identity of the North-East, a new 24x7 channel called “Arun
Prabha” will be launched.
Andhra Pradesh and Telangana
 Government committed to addressing the issues relating to
development of Andhra Pradesh and Telangana in the AP
Reorganization Act, 2014. Provision made by various
Ministries/Departments to fulfill the obligation of Union
Government.
NCT of Delhi
 200 crore for power reforms and 500 crore for water reforms to
make Delhi a truly World Class City.
 50 crore provided to solve the long term water supply issues to
the capital region.Construction of long pending Renuka Dam to
be taken up on priority.
Andaman and Nicobar Island and Puducherry
 150 crore provided to tide over communication related
problems of the Island.
 188 crore to Puducherry for meeting commitments for Disaster
preparedness.
 Displaced Kashmiri Migrants
 500 crore provided to support displaced Kashmiri migrants for
rebuilding their lives.
Himalayan Studies
 100 crore provided to set up a National Centre for Himalayan
Studies in Uttarakhand.
Budget Estimates
 Mandate to be fulfilled without compromising fiscal
consolidation.
 Non-plan Expenditure of 12,19,892 crore with additional
provision for fertilizer subsidy and Capital expenditure for Armed
forces.
 5,75,000 crore Plan expenditure – increase of 26.9 per cent over
actuals of 2013-14.
 Plan increase targeted towards Agriculture, capacity creation in
Health and Education,Rural Roads and National Highways
Infrastructure, Railways network expansion,clean energy
initiatives, development of water resources and river
conservation plans.
 Total expenditure of 17,94,892 crore estimated.
 Gross Tax receipts of 13,64,524 crore estimated,
 Net to centre of 9,77,258 crore estimated.
 Fiscal deficit of 4.1% of GDP and Revenue deficit of 2.9%
estimated.
 New Statement to separately show plan allocation made for
North Eastern Region.
 Allocation of 53,706 crore for North East Regions.
 Allocation of ` 50,548 crore under SCSP and 32,387 under TSP.
Allocation for women at 98,030 crore and for children at 81,075
crore.
Tax Proposals
 Ambitious Revenue Collection Targets in Interim Budget.
Proposed tax changes factored in the Budget Estimates 2014-15.
 Measures to revive the economy, promote investment in
manufacturing, rationalize tax provisions to reduce litigation,
address the problem of inverted duty structure in certain areas.
Tax reliefs to individual tax payers.
Direct Taxes Proposals
 Personal Income-tax exemption limit raised by 50,000/- that is,
from 2 lakh to 2.5 lakh in the case of individual taxpayers, below
the age of 60 years. Exemption limit raised from 2.5 lakh to 3
lakh in the case of senior citizens.
 No change in the rate of surcharge either for the corporates or
the individuals, HUFs,firms etc.
 The education cess to continue at 3 percent.
 Investment limit under section 80C of the Income-tax Act raised
from 1 lakh to 1.5 lakh.
 Deduction limit on account of interest on loan in respect of self
occupied house property raised from 1.5 lakh to 2 lakh.
 Conducive tax regime to Infrastructure Investment Trusts and
Real Estate Investment Trusts to be set up in accordance with
regulations of the Securities and Exchange Board of India.
 Investment allowance at the rate of 15 percent to a
manufacturing company that invests more than 25 crore in any
year in new plant and machinery. The benefit to be available for
three years i.e. for investments upto 31.03.2017.
 Investment linked deduction extended to two new sectors,
namely, slurry pipelines for the transportation of iron ore, and
semiconductor wafer fabrication manufacturing units.
 10 year tax holiday extended to the undertakings which begin
generation, distribution and transmission of power by
31.03.2017.
 Income arising to foreign portfolio investors from transaction in
securities to be treated as capital gains.
 Concessional rate of 15 percent on foreign dividends without
any sunset date to be continued.
30
 The eligible date of borrowing in foreign currency extended from
30.06.2015 to 30.06.2017 for a concessional tax rate of 5
percent on interest payments. Tax incentive extended to all
types of bonds instead of only infrastructure bonds.
 Introduction of a “Roll Back” provision in the Advanced Pricing
Agreement (APA) scheme so that an APA entered into for future
transactions is also applicable to international transactions
undertaken in previous four years in specified circumstances.
 Introduction of range concept for determination of arm’s length
price in transfer pricing regulations.
 To allow use of multiple year data for comparability analysis
under transfer pricing regulations.
 To remove tax arbitrage, rate of tax on long term capital gains
increased from 10 percent to 20 percent on transfer of units of
Mutual Funds, other than equity oriented funds.
 Income and dividend distribution tax to be levied on gross
amount instead of amount paid net of taxes.
 In case of non deduction of tax on payments, 30% of such
payments will be disallowed instead of 100 percent.
 Government to review the DTC in its present shape and take a
view in the whole matter.
 60 more Ayakar Seva Kendras to be opened during the current
financial year to promote excellence in service delivery.
 Net Effect of the direct tax proposals to result in revenue loss of
22,200 crore.
Indirect Taxes Proposals
 To boost domestic manufacture and to address the issue of
inverted duties, basic customs duty (BCD) reduced on certain
items.
 To encourage new investment and capacity addition in the
chemicals and petrochemicals sector, basic customs duty
reduced on certain items.
 Steps taken to boost domestic production of electronic items
and reduce our dependence on imports. These include
imposition of basic customs duty on certain items falling outside
the purview of IT Agreement, exemption from SAD on
inputs/components for PC manufacturing, imposition of
education cess on imported electronic products for parity etc.
 Colour picture tubes exempted from basic customs duty to make
cathode ray TVs cheaper and more affordable to weaker
sections.
 To encourage production of LCD and LED TVs below 19 inches in
India, basic customs duty on LCD and LED TV panels of below 19
inches reduced from 10 percent to Nil.
 To give an impetus to the stainless steel industry, increase in
basic customs duty on imported flat-rolled products of stainless
steel from 5 percent to 7.5 percent.
 Concessional basic customs duty of 5 percent extended to
machinery and equipment required for setting up of a project for
solar energy production.
 Specified inputs for use in the manufacture of EVA sheets and
back sheets and flat copper wire for the manufacture of PV
ribbons exempted from basic customs duty.
 Reduction in basic customs duty from 10 percent to 5 percent
on forged steel rings used in the manufacture of bearings of
wind operated electricity generators. Exemption from SAD of 4
percent on parts and raw materials required for the
manufacture of wind operated generators.
 Concessional basic customs duty of 5 percent on machinery and
equipment required for setting up of compressed biogas plants
(Bio-CNG).
 Anthracite coal, bituminous coal, coking coal, steam coal and
other coal to attract 2.5 per cent basic customs duty and 2 per
cent CVD to eliminate all assessment disputes and transaction
costs associated with testing of various parameters of coal.
 Basic customs duty on metallurgical coke increased from Nil to
2.5 percent in line with the duty on coking coal.
 Duty on ship breaking scrap and melting scrap of iron or steel
rationalized by reducing the basic customs duty on ships
imported for breaking up from 5 percent to 2.5 percent.
 To prevent mis-use and avoid assessment disputes, basic
customs duty on semiprocessed, half cut or broken diamonds,
cut and polished diamonds and coloured gemstones rationalized
at 2.5 percent.
 To encourage exports, pre-forms of precious and semi-precious
stones exempted from basic customs duty.
 Duty free entitlement for import of trimmings, embellishments
and other specified items increased from 3 percent to 5 percent
of the value of their export, for readymade garments.
 Export duty on bauxite increased from 10 percent to 20 percent.
 For passenger facilitation, free baggage allowance increased
from 35,000 to 45,000.
 To incentivize expansion of processing capacity, reduction in
excise duty on specified food processing and packaging
machinery from 10 percent to 6 percent. R
 eduction in the excise duty from 12 percent to 6 percent on
footwear of retail price exceeding 500 per pair but not exceeding
1,000 per pair.
 Withdraw concessional excise duty (2 percent without Cenvat
benefit and 6 percent with Cenvat benefit) on smart cards and a
uniform excise duty at 12 percent.
 To develop renewable energy, various items exempted from
excise duty. Exemption to PSF and PFY manufactured from
plastic waste and scrap including PET bottles from excise duty
with effect from 29th June, 2010 to 7th May, 2012.
 Prospective levy of a nominal duty of 2 percent without Cenvat
benefit and 6 percent with Cenvat benefit on such PSF and PFY.
 Concessional excise duty of 2 percent without Cenvat benefit
and 6 percent with Cenvat benefit on sports gloves.
 Specific rates of excise duty increased on cigrettes in the range
of 11 percent to 72 per cent.
 Excise duty increased from 12 percent to 16 percent on pan
masala, from 50 percent to 55 percent on unmanufactured
tobacco and from 60 percent to 70 percent on gutkha and
chewing tobacco.
 Levy of an additional duty of excise at 5 percent on aerated
waters containing added sugar.
 To finance Clean Environment initiatives, Clean Energy Cess
increased from 50 per tonne to 100 per tonne.
Service tax

Thrust
 IR to become prime mover of economy once again
 Resource Mobilization for higher Investments
 Decongestion of heavy haul routes and speeding up of trains:
emphasis on gauge conversion, doubling, tripling and
electrification
 Project delivery
 Passenger Amenities.
 Safety
 Transparency & System Improvement.
 Railways to continue to be the preferred mode of transport for
the masses.
 Sustainability
Four goals for Indian Railways to transform over next five years
 To deliver a sustained and measurable improvement in customer
experience.
 To make Rail a safer means of travel.
 To expand Bhartiya Rail’s capacity substantially and modernise
infrastructure.: increase daily passenger carrying capacity from
21million to 30 million: increase track length by 20% from
1,14,000 km to 1,38,000 km, grow our annual freight carrying
capacity from 1 billion to 1.5 billion tonnes.
31
 To broaden the tax base in Service Tax, sale of space or time for
advertisements in broadcast media, extended to cover such
sales on other segments like online and mobile advertising. Sale
of space for advertisements in print media however would
remain excluded from service tax. Service provided by radio-
taxis brought under service tax.
 Services by air-conditioned contract carriages and technical
testing of newly developed drugs on human participants brought
under service tax.
 Provision of services rules to be amended and tax incidence to
be reduced on transport of goods through coastal vessels to
promote Indian Shipping industry.
 Services provided by Indian tour operators to foreign tourists in
relation to a tour wholly conducted outside India to be taken out
of the tax net and Cenvat credit for services of rent-a-cab and
tour operators to be allowed to promote tourism.
 Service tax exempted on loading, unloading, storage,
warehousing and transportation of cotton, whether ginned or
baled.
 Services provided by the Employees’ State Insurance
Corporation for the period prior to 1st July 2012 exempted, from
service tax.
 Exemption available for specified micro insurance schemes
expanded to cover all life micro-insurance schemes where the
sum assured does not exceed 50, 000 per life insured.
 For safe disposal of medical and clinical wastes, services
provided by common biomedical waste treatment facilities
exempted.
 Tax proposals on the indirect taxes side are estimated to yield
7525 crore.
 24X7 customs clearance facility extended to 13 more airports in
respect of all export goods and to 14 more sea ports in respect
of specified import and export goods to facilitate cargo
clearance.
 Indian Customs Single Window Project to facilitate trade, to be
implemented.
 The scheme of Advance Ruling in indirect taxes to be expanded
to cover resident private limited companies. The scope of
Settlement Commission to be enlarged to facilitate quick dispute
resolution.
 Customs and Central Excise Acts to be amended to expedite the
process of disposal of appeals.
RAIL BUDGET 2015-16
 Finally, to make Bhartiya Rail financially self-sustainable.
Generate large surpluses from operations not only to service the
debt needed to fund our capacity expansion, but also to invest
on an ongoing basis to replace our depreciating assets
Execution strategy to have five drivers
Adopting a medium-term perspective
Railway Budget part of trilogy of documents viz. the White Paper
placed today, Budget 2015-16 & a Vision-2030 document which will
follow. Budget proposals to mark beginning of a Five Year Action Plan
to transform the Railways.
PROPOSED INVESTMENT PLAN (2015-2019)
Item Amount (Rs
in crore)
Network Decongestion (including DFC, 199320
Electrification, Doubling including electrification
and traffic facilities)
Network Expansion (including electrification) 193000
National Projects (North Eastern & Kashmir 39000
connectivity projects)
Safety (Track renewal, bridge works, ROB, RUB and 127000
Signalling & Telecom)
Information Technology / Research 5000
Rolling Stock (Locomotives, coaches, wagons – 102000
production & maintenance)
Passenger Amenities 12500
High Speed Rail & Elevated corridor 65000
Station redevelopment and logistic parks 100000
Others 13200
TOTAL 8,56,020
Building Partnerships
This will require partnering with key stakeholders: States, PSU’s,
partner with multilateral and bi-lateral organizations & other
governments to gain access to long term financing and technology
from overseas, the private sector to improve last mile connectivity,
expand fleet of rolling stock and modernize our station infrastructure.
Leveraging additional resources
IR envisages investment of Rs. 8.5 lakh crore in next five years to be
mobilized from multiple sources to cater to funding i.e Multilateral
development banks, pension funds.
Revamping management practices, systems, processes, and re-
tooling of HR
 Targeted operating ratio for 2015-16 at 88.5% against 91.8%in
2014-15: best in the last 9 years.
 IR to speed up decision making, tighten accountability, improve
management information systems: training and development of
human resource.
To set standards for Governance and Transparency
Eleven major thrust areas of Action Plan
Cleanliness:
Swachh Rail Swachh Bharat, new department for cleanliness,
integrated cleaning by engaging professional agencies and training
our staff, ‘waste to energy’ conversion plants, new toilets covering
650 additional stations compared to 120 stations last year. Bio-toilets.
Bed linen:
NIFT to design; online booking of disposable bed rolls:
Help-line:
24X7 helpline number 138;toll-free number 182 for security related
complaints.
Ticketing:
operation five minutes for issuing unreserved tickets, hot buttons,
coin vending machines, single destination teller, concessional e-
tickets for differently abled travelers, developing a multi-lingual e-
portal, crediting of refunds through banks, unreserved tickets on
Smart phones, proliferation of automatic ticket vending machines
with smart cards and currency options, integrated ticketing system on
the lines of rail-cum-road tickets, Defence Travel System developed
for elimination of Warrants .
Catering:
e-catering to select meals from an array of choices. Ordering food
through IRCTC website at the time of booking of tickets; integrating
best food chains into this project; setting up of Base Kitchens in
specified Divisions to be run by reputed agencies for serving quality
food; expansion of water vending machines.
Leveraging technology:
Hand-held terminals to Travelling Ticket Examiners (TTEs) for
verification of passengers and downloading charts; possibility of
extending facility of SMS on mobiles as a valid proof of travel for PRS
tickets; integrated customer portal as a single interface to access
different services; Introduction of a centrally managed Railway
Display Network in over 2000 stations in next two years;“SMS Alert”
service to inform passengers in advance of the updated
arrival/departure time of trains at starting or destination stations.
Surveillance:
surveillance cameras provided on a pilot basis in selected mainline
coaches and ladies’ compartments of suburban coaches without
intruding into privacy.
Entertainment:
project for introducing on-board entertainment on select Shatabdi
trains on license fee basis launched; Mobile phone charging facilities
32
to be provided in general class coaches & increased in sleeper class
coaches.
Station facilities:
200 more stations to come under Adarsh Station scheme; Wi - Fi to
be provided at B category stations ; facility of self-operated lockers to
be made available at stations; provision of concierge services through
IRCTC at major stations; online booking of wheel chair on payment
basis for senior citizens, patients and the differently-abled passengers
through IRCTC on select stations.
Train capacity:
capacity in identified trains be augmented to run with 26 coaches;
more
General class coaches be added in identified trains;
Comfortable travel:
NID approached to design user friendly ladders for climbing upper
berths; increasing quota of lower berths for senior citizens; TTEs be
instructed to help senior citizens, pregnant women and differently-
abled persons in obtaining lower berths; middle bay of coaches to be
reserved for women and senior citizen; NID to develop ergonomically
designed seats; introduction of train sets; Provision of Rs. 120 crore
for Lifts and escalator which is 76% higher; newly manufactured
coaches will be Braille enabled; building wider entrances for the ease
of differently-abled passengers; allocation for passenger amenities up
by 67% Y-O-Y. Corporate houses & MPs to be requested to invest in
improving passenger amenities at Railway stations through CSR &
MPLAD funds; Divisional Committees in each Railway to be chaired by
Members of Parliament.
Station Redevelopment
Station redevelopment policy to be revamped and processes
simplified by inviting open bids; present stations be available for
development on “as is where is” basis, to exploit the space and air
rights on concession basis; Zonal and Divisional offices be empowered
for quicker decision making;Land will not be sold; Development of 10
Satellite Railway terminals in major cities with twin purpose of
decongesting the city and providing service to n suburban passengers
Capacity Augmentation
Network expansion:
 Decongesting networks with basket of traffic generating
projects priority; priority to last mile connectivity projects ;
fast track sanctioned works on 7,000 kms of
double/third/fourth lines and commission 1200 km in 2015-
16 at an investment of Rs. 8686 crore, 84% higher Y-O-Y.
 Commissioning 800 km of gauge conversion targeted in
current fiscal.
 77 projects covering 9,400 km of
doubling/tripling/quadrupling works along with
electrification, covering almost all States, at a cost of Rs.
96,182 crore which is over 2700% higher in terms of
amount sanctioned.
 Traffic facility works a top priority with outlay of Rs. 2374
crore .
 In the North East States, Meghalaya brought on the Railway
map of India and direct connectivity to Delhi provided.
Barak Valley to be connected on BG .
 Award of 750 km of civil contracts and 1300 km of system
contracts in 2015-16 on Dedicated Freight Corridor; 55 km
section of Eastern DFC to be completed in the current year.
Preliminary Engineering cum Traffic Survey (PETS) for four
other DFCs in progress.
Acceleration of pace of Railway electrification: 6,608 route
kilometers sanctioned for 2015-16 , an increase of 1330% over the
previous year.
Expansion of freight handling capacity
 Transport Logistics Corporation of India (TRANSLOC), to be set
up for developing common user facilities with handling and
valueadded services to provide end-to-end logistics solution at
select Railway terminals through Public Private Partnerships.
 For the benefit of our farmers, a state of the art Perishable Cargo
Centre under completion at the Azadpur Mandi with a scientific
banana-ripening Centre; air cargo sector to be developed to
facilitate and integrate the movement of air cargo between ICDs
and the gateway airports.
 Policy for Private Freight Terminals (PFT) to be revised.
 Automatic Freight Rebate Scheme for traffic to be expanded
 Long haul freight operations to be used extensively; construction
of long loop lines to be expedited. Distributed power system for
multi-loco haulage to be accelerated.
Improving train speed
 Speed of 9 railway corridors to be increased from existing 110
and 130 kmph to 160 and 200 kmph respectively so that inter-
metro journeys like Delhi-Kolkotta and Delhi-Mumbai can be
completed overnight.
 Average speed of freight trains in empty and loaded conditions,
will be enhanced to 100 kmph for empty freight trains and 75
kmph for loaded trains; loading density on all major freight
bearing routes to be upgraded to 22.82 tonne axle loads.
Bullet train
Feasibility study for High Speed Rail between Mumbai-Ahmadabad is
in advanced stage and report expected by the mid of this year. For
other high speed routes on the diamond quadrilateral, studies are
being commissioned.
Upgrading manufacturing capability
 Creation of job opportunities by upgrading the manufacturing
capability.
 Functioning of Indian Railways Production Units and Workshops
would be reviewed to provide them a cutting edge; measures for
technological upgradation and enhancing productivity be
undertaken to make them self-sustaining
Safety
 Action plan being prepared for areas where accidents occur:
fiveyear corporate safety plan by June 2015 indicating annual
quantifiable targets; Pending recommendations made by High
Level Safety Review Committee headed by Dr. Kakodkar
Committee to be examined by April 2015.
 RDSO to develop a suitable device with reliable power supply
system based on theft-proof panels/batteries in consultation
with Indian Space Research Organization, using geo-spatial
technology for providing audio-visual warning to road users at
unmanned level crossings; radio based signal design project
been taken up with IIT Kanpur for warnings at unmanned level
crossing.
 970 ROB/RUBs and other safety-related works to eliminate 3438
level crossings at a total Railway expense of Rs. 6,581 crore have
been sanctioned which is 2600% higher than the previous year
covering most States.
 Train Protection Warning System and Train Collision Avoidance
System to be installed on select routes at the earliest.
 Modern track structure consisting of sleepers and heavier rails
being used while carrying out primary track renewals. Better
welding techniques being promoted; digital type machines to
replace analogue type machines.
Partnerships for development
 PPP cell to be revamped to make it result oriented.
 Projects for rail connectivity to many ports and mines being
developed under participative models; simplification of
procedures and consistency of policy to be ensured.
 “Foreign Rail Technology Cooperation scheme” to be launched.
 MUTP III for Mumbai to be taken up.
 Joint ventures to be set up with States for focused project
development, resource mobilization, land acquisition, project
implementation and monitoring of critical rail projects.
 JVs to be set up with major public sector customers for meeting
requirements of new lines.
Technology up gradation
33
 Constituting an innovation council called “Kayakalp” for business
re-engineering and introducing a spirit of innovation in Railways.
 Technology portal being constituted to invite innovative
technological solutions.
 Strengthening of RDSO into an organization of excellence for
applied research; four Railway Research Centers to be set up in
select universities for fundamental research; ‘Malaviya Chair’ for
Railway Technology at IIT (BHU), Varanasi to be set up.
 Consortium of Ministry of Railways, Ministry of Human Resource
Development, Ministry of Science And Technology and Industries
on to take up identified Railway projects for research.
 IT vision to be unveiled: information on latest berth availability
station navigation system, bar coded/RFID tracking of parcels
and freight wagons, automated parcel warehouses. Integration
of train control and asset management applications. Mechanize
integrated track maintenance.
Improvement to management Processes and Systems
 Delegate, de-centralize, de-regulate & simplify to be the new
mantra.
 Systems audit to be conducted for review of all processes and
procedures.
 Global benchmarks for key operating and maintenance activities.
 Improve appraisal mechanism for the selection of projects and
introduce simulation tools for project planning and
decisionmaking; introducing EPC system of contracting.
 Constitution of a working group to modify present system of
accounting, to ensure tracking of expenditure to desired
outcomes.
 Train operations to be audited.
 Paperless working in material management system to be
expanded; Vendors to be integrated through Vendor Interface
Management System to provide single window interface to
vendors.
Resource Mobilisation
 Plan Budget up by 52% from Rs. 65,798 crore to Rs. 1,00,011
crore in 2015-16. Support from the Central Government 41.6%
of the Plan and Internal generation 17.8 %; setting up of a
Financing Cell in the Railway Board.
 Setting up an infrastructure fund, a holding company and a JV
with an existing NBFC of a PSU with IRFC, for raising long term
debt from domestic as well as overseas sources, including
multilateral and bilateral financial institutions. Monetisation of
assets rather than selling them.
 Digitized mapping of land records and responsibility fixing for
encroachments.
 New strategy to tap latent advertising potential, including
offering stations and trains for corporate branding.
 Coastal Connectivity Program. Railways in partnership with ports
will deliver rail connectivity to Nargol, Chharra, Dighi, Rewas and
Tuna.
 Projects worth Rs 2500 crore through BOT/ Annuity route. These
include Wardha- Nagpur 3rd line, Kazipet-Vijaywada 3rd line,
Bhadrak –Nargundi 3rd line and Bhuj- Nalia Gauge Conversion.
 Scrap disposal policy to be reviewed for speedier scrap disposal.
Human Resources
 Human Resource Audit to be undertaken. Focused Human
Resource strategy to raise employee productivity in line with
global standards. Separate accounting head for HRD. ERP based
Human Resource Management System.
 Special training module on soft skills for frontline staff so that
our customers feel welcomed. Training in yoga.
 Setting up a full-fledged University during 2015-16.
 Improved delivery of health services to employees: Upgradation
of four Holiday Homes.
Energy and Sustinability
 Environment Directorate to be constituted in Railway Board to
give increased focus and thrust on environment management.
 Detailed energy audit for energy saving.
 Procure power through the bidding process at economical tariff
from generating companies, power exchanges, and bilateral
arrangements. Initiative likely to save at least Rs. 3,000 crore in
next few years.
 Solar Power as part of the Solar Mission of Railways. 1000 MW
solar plants will be set up by the developers on Railway/private
land and Railway buildings with subsidy/viability gap funding
support of Ministry of Non-Renewable Energy in next five years.
 Water conservation mission including water audit and expansion
of water harvesting systems.
 Accreditation for environment management to be extended.
 100 DEMUs to be enabled for dual fuel – CNG and diesel.
Locomotives running on LNG are also currently under
development.
 Noise levels of locos to be at par with international norms;
concerns related to wildlife to be addressed.
 Investing in Indian Railways necessary for our ecological
sustenance mainly due to efficiencies of fuel consumption.
Transparency and Governance initiatives
 System of on-line applications introduced for two categories of
recruitment as a pilot project- to be extended.
 All possible solutions be explored to address menace of
corruption.
 E-procurement value chain being expanded.
 Constituting a mechanism for making regulations, setting
performance standards, determining tariffs & adjudicating
disputes among licensees/private partners and the Ministry,
subject toreview in appeal.
Social initiatives
 Infrastructure like stations and training centers to be made
available for skill development. Indian Railways personnel and
their services also available for this national cause.
 Promotion of products made by Self Help Groups, consisting
mainly of women and youth on the model of Konkan Railway.
Tourism
 Incredible Rail for Incredible India to be launched; Promotion of
training of auto-rickshaw and taxi-operators as tourist-guides on
the model of Konkan Railway.
 Coaches in select trains connecting major tourist destinations to
travel agencies may be offered on a revenue sharing model.
 IRCTC to work on promoting the Gandhi circuit to attract
tourists to mark the occasion of 100 years of the return of
Mahatma Gandhi to India from South Africa; IRCTC will work on
Kisan Yatra, a special travel scheme for farmers for farming &
marketing technique centres.
FINANCIAL PERFORMANCE (2014-15)
 Net reduction in Gross Traffic Receipts by Rs 917 crore compared
to the BE of Rs 1,60,165 crore.
 Growth in Ordinary Working Expenses (O.W.E) scaled down to
11.7% as against BE of 15.5% y-o-y. Taking into account the likely
savings accruing from drop in prices of HSD (high speed diesel)
for traction partly offset by higher requirements under certain
heads for maintenance, safety and cleanliness activities, the
budgeted O. W. E. of Rs 1,12,649 crore decreased in the RE
2014-15 to Rs. 1,08,970 crore i.e. by Rs 3,679 crore.
 Appropriation to the Pension Fund has been increased to Rs.
29,540 crore in RE.
i. Internal resource generation also improved and
accordingly the appropriation to DRF has been scaled
Thrust
1. Safety
34
up to Rs 7,975 crore in RE from the BE 2014-15
provision of Rs 7,050 crore.
ii. After taking into account the above, "Excess" of
receipts over expenditure stands at Rs 7,278 crore in
RE 2014-15 reflecting better financial management.
 Plan size for 2014-15 increased from Rs 65,445 crore in the B.E
to Rs 65,798 crore in the Revised Estimates i.e. by Rs 353 crore
with higher provisions under internal resource component and
market borrowings for rolling stock requirement.
Budget Estimates for 2015-16
 The intention is to capture increased revenues and ensure
appropriate investments so as to decongest the system and
enhance line-capacity.
 Passenger earnings growth pegged at 16.7% and target
budgeted at Rs. 50,175 crore.
 Freight traffic is pegged at an all time high incremental traffic of
85 million tonnes, anticipating a healthier growth in the core
sector of economy; Goods earnings proposed at Rs. 1,21,423
crore which includes rationalisation of rates, commodity
classification and distance slabs.
 Other coaching and sundries are projected at Rs. 4,612 crore and
Rs. 7,318 crore.
 Gross Traffic Receipts estimated at Rs 1,83,578 crore , a growth
of 15.3%.
 Ordinary Working Expenses proposed to grow at 9.6% over RE
2014-15. Traction fuel bill anticipated to shrink further.
 Higher provisions made for safety maintenance and cleanliness.
Lease charges, interest component of the current and previous
market borrowings, at a growth of 21%.
 Appropriation to Pension Fund proposed at Rs 35,260 crore and
appropriation to DRF at Rs 8,100 crore. Appropriation of Rs
7,616 crore proposed to be made to Capital Fund for payment of
principal component of lease charges to IRFC.
Plan Outlay 2015-16
 Gross Budgetary Support of Rs 40,000 crore for the Railway’s
annual Plan. Rs 1,645.60 crore has also been provided as
Railway’s share of diesel cess from the Central Road Fund.
Market borrowing under EBR projected at Rs 17,655 crore, an
increase of about 46.5%. Balance Plan outlay includes Rs 17,793
crore from Internal Resources and Rs. 5781 crore from PPP.
Significantly, we are allocating large amounts towards Doubling,
Traffic Facilities,Electrification and Passenger Amenities.
 Given the huge shelf of project and ensuring proper funds flow
for the same with a view to completing them on target, a new
financing approach to expand EBR has been projected. This EBR,
presently named EBR (Institutional Finance) would be based on
institutional investments in railway projects through Railway/
PSUs. This element is projected at Rs 17,136 crore and is aimed
at accelerating completion of capacity augmentation projects.
Works proposed to be financed through this mode are listed in
the Budget documents.
 Plan Outlay is Rs 1,00,011 crore, an increase of 52% over RE
2014- 15. It is anticipated that the Plan size will get higher once
resources from institutional bodies are formalized during the
course of the ensuing financial year.
Conclusion
 Complete the review of speed restrictions soon.
 All critical initiatives to be pursued in mission mode under
designated senior officials in the Ministry of Railways as Mission
Directors; similar structure replicated in all Zonal Railways.
RAIL BUDGET 2014-15
2. Project Delivery
3. Passenger Amenities/Services with focus on food services & on
cleanliness, sanitation, toilets
4. Financial Discipline
5. Resource Mobilization
6. IT Initiatives
7. Transparency & System Improvements
Major Challenges facing the Railway System
 Vast tracts of hinterland waiting for rail connectivity
 Railways expected to earn like a commercial enterprise but serve
like a welfare organization.
 Railways carry Social Service Obligation of more than Rs 20,000
cr by carrying services below cost. This is nearly 16.6% of GTR
and is almost half of Railways’ Plan Outlay under budgetary
sources.
 Surplus revenues declining; Hardly any adequate resources for
its development works.
 Tariff policy adopted lacked rational approach; passenger fares
kept lower than costs; loss per passenger kilometer increased
from 10 Paise per Km in 2000-01 to 23 Paise in 2012-13.
 ‘Decade of Golden Dilemma’ – choosing between commercial
and social viability.
 Share of Railways in freight traffic coming down consistently. Rs
5 lakh crore required for ongoing projects alone.
 Focus so far in sanctioning more and more projects with
inadequate prioritization rather than completing them; Of the
674 projects worth Rs 1,57,883 cr sanctioned in the last 30 years,
only 317 could be completed. Completing the balance requires
Rs 1,82,000 cr.
 Most of Gross Traffic Receipts is spent on fuel, salary and
pension, track & coach maintenance and on safety works . In the
year 2013- 14, Gross Traffic Receipts were 1,39,558 crore and
total Working Expenses were 1,30,321 crore,
 The surplus, after paying obligatory dividend and lease charges,
was 11,754 crore in 2007-08 and is estimated to be 602 crore in
the current financial year.
Course Correction and Initiatives
 Works to be re-prioritized with more focus on doubling and
tripling to decongest the over-utilized network.
 Recent fare and tariff hike to mop additional revenue of about
8,000 cr.
 Alternate resource mobilization need to be explored as enlisted.
o Leveraging Railway PSU Resources by bringing in their
investible surplus funds in infrastructure projects of
Railways.
o Domestic investments and FDI in rail infrastructure.
o Pursuing Public Private Partnership.
 Near Plan-holiday approach.
 Prioritizing and setting timelines for completion of the ongoing
projects.
 Decision Support System for project implementation.
 Strategic partnerships and transparency in procurements.
 Aggressive indigenization of imported products.
 Developing locomotives, coaches and wagon leasing Market.
Passenger Amenities/Services & Station Management - including
Cleanliness & Catering
 Provision of foot-over bridges, escalators, lifts, etc. at all major
stations including through PPP route.
 Provision of sufficient water supply, platform shelters and toilets
at Railway Stations.
 Battery operated cars for differently-abled and senior citizens at
platforms of all major stations.
 Involvement of individuals, NGOs, Trusts, Charitable Institutions,
Corporates to provide passenger amenities at stations.
 Provision of workstations in select trains on payment basis.
35
 Expanding scope of online booking of train, coaches, berth &
chair car.
 Introduction of parking cum platform combo tickets.
 E-booking of railway retiring rooms. Introduction of Ready-to-eat
meals of reputed brands in a phased manner.
 Introduction of Quality Assurance Mechanism through Third
Party Audit by NABCB certified agencies.
 Launching feedback service through IVRS on the quality of food.
 Setting up of Food Courts at major stations for providing regional
cuisine while onboard through emails, SMS and Smart Phones,
etc. Pilot project between New Delhi-Amritsar and New Delhi-
Jammu Tawi sections.
 Substantial increase of 40% in budget allocation for cleanliness.
 Outsourcing of cleaning activities at 50 major stations to
professional agencies. Setting up of separate Housekeeping
Wing for maintaining cleanliness and sanitation at stations.
 Setting up of Corpus Fund at Stations’ upkeep.
 Extending use of CCTVs at stations to monitor cleanliness
activities.
 Printing of all India level complaint/helpline number on PRS
tickets and introduction of system of third party inspections.
 Extension of onboard Housekeeping services to all important
trains.
 Increasing mechanized laundries for quality bedrolls in AC
coaches.
 Introduction of RO drinking water units at Stations and in trains
on experimental basis.
 Encouraging reputed and willing NGOs, charitable institutions
and Corporate Houses for adopting and maintaining stations.
Measures for improving Safety & Security
 Provision of 1,785 crore for Road-over-bridges and
Roadunderbridges; speedy clearances, online design
standardization and decentralised sanctioning powers.
 Multi-pronged approach to eliminating Unmanned Level
Crossings.
 Advanced technology for rail-flaw detection - Vehicle Borne
Ultrasonic Flaw Detection System to detect rail and weld
fractures and pilot trials on Ultrasonic Broken Rail Detection
System (UBRD) at two locations.
 Safety standards to match international practices. Simulation
Center to study causes of accidents.
 Pilot project on Automatic door closing in mainline and sub-
urban coaches.
 4000 women RPF constables to be recruited in addition to 7000
RPF constables.
 RPF escorting teams in trains to be provided mobile phones
helping passengers in contacting them in distress. Coaches for
ladies will be escorted. Care to be taken for ladies travelling
alone.
 Building boundary walls around stations through PPP route to be
explored.
Green Initiatives
 Harnessing solar energy by utilizing roof top spaces of stations,
railway buildings and land including through PPP mode.
 Use of bio-diesel up to 5% of total diesel fuel consumption.
 Increasing bio-toilets in sufficient numbers in trains to mitigate
the problem of direct discharge of human waste on the tracks
and platforms.
Rail Tourism
 Eco-Tourism and Education Tourism in Northeastern States.
 Special Packaged trains on identified pilgrim circuits like Devi
Circuit,
 Jyotirling Circuit, Jain Circuit, Christian Circuit, Muslim/Sufi
Circuit,Sikh Circuit, Buddhist Circuit, Famous Temple Circuit, etc.
T
 Tourist Train from Gadag to Pandarpur via Bagalkot, Bijapur and
Solapur
 covering the pilgrim and tourist places of Karnataka and
Maharashtra.
 Tourist Train from Rameshwaram covering pilgrim and tourist
places like Bengaluru, Chennai, Ayodhya, Varanasi and Haridwar.
 Special Train featuring life and work of Swami Vivekananda.
IT Initiatives including revamping reservation system
 Revamping Railway Reservation System into Next Generation
eTicketing System.
 E-ticketing to support 7200 tickets per minutes to allow 1,20,000
simultaneous users.
 Augmentation of Coin operated Automatic Ticket Vending
Machines.
 Provision of platform tickets and unreserved tickets over
internet.
 Shift towards large scale Integrated computerization of major
functions of Indian Railways to take place.
o Paperless offices in Indian Railways in 5 years.
o Wi-fi Services in A1 and A category stations and in
select trains.
o Real-time tracking of trains and rolling stock.
o Mobile based Wakeup Call System for passengers.
o Mobile based Destination Arrival Alert.
o Station Navigation Information System.
o Extension of Dual Display Fare Repeaters at all the
Ticket Counters through PPP.
o Digital reservation charts at Stations (Bangalore
model).
o Extension of Computerized Parcel Management
System.
o Extension of logistics support to various e-commerce
Companies by providing designated pick-up centres at
identified Stations.
o Providing education to children of Railway staff at
remote locations through Railtel OFC (optical fibre
cable) network.
 GIS mapping and Digitisation of Railway land.
Staff Welfare
 Per capita contribution to Staff Benefit Fund increased from `
500 to 800'.
 Special scheme for meritorious wards of railway persons.
 Hospital Management Information System to integrate all
railway health units and hospital.
 Provision of air-conditioned loco cabins to be examined.
Training
 Setting up of Railway University for both technical and
nontechnical subjects.
 Tie up with technical institutions for introducing railway
oriented. subjects for graduation and skill development.
 Short duration courses for ground level officers.
 Exposure to specialized areas like high-speed, heavy haul
operations, etc., for all level of staff and officials at institutes in
India and abroad.
Speed of Trains
 Bullet train proposed on identified Mumbai-Ahemdabad sector.
 Setting up of Diamond Quadrilateral Network of High Speed Rail
connecting major metros and growth centers of the country; 100
cr provided for initiating the project.
 Increasing of speed of trains to 160-200 kmph in select 9 sectors.
 All experimental stoppages to lapse after 30.09.2014.
 Only operational feasibility and commercial justifications for new
stoppages; alternate train connectivity to meet genuine
demands.
Resource Augmentation
36
 PPP through BOT and Annuity route and identification of 8 to 10
capacity augmentation projects on congested routes; Zonal
Railways to be suitably empowered to finalize and execute such
projects.
 Facilitating connectivity to new and upcoming ports through
PPP.
 Speedy work on critical coal connectivity lines to bring nearly
100 MT of incremental traffic to Railways and facilitating faster
transportation of coal to power houses.
 Developing identified stations to international standards with
modern facilities on lines of newly developed airports through
PPP mode.
 Setting up of Logistic Parks to modernize logistics operations;
Top priority to mechanization of loading and unloading.
 Suitable pricing mechanism to garner additional revenue from
empty flow - Pilot project for automatic rebate to customers
offering traffic through computerized FOIS system.
 Launching scheme to facilitate procurement of parcel vans or
parcel rakes by private parties.
 New design of parcel vans with better tare to pay load finalized.
 Setting up of Private Freight Terminal on PPP model to develop
network of freight terminals.
 Boost to rail movement of fruit and vegetables in partnership
with Central Railside Warehousing Corporation at 10 locations.
 Provision of special milk tanker trains in association with
National Dairy Board and Amul to facilitate transportation of
milk through rail.
Other Initiatives
 Setting up of Project Management Groups consisting of
professionals and State Government Officials at Railway Board
and Zonal level for coordinating and expediting project
management with respective State Governments.
 Establishing Innovations Incubation Centre to harness the ideas
generated from staff and converting them into practical
solutions.
 Summer internships for under-graduates of engineering and
management studies.
 Structural Reforms – separation of overlapping roles of policy
formulation and implementation.
 Top priority to transparency in administration and execution of
projects.
 Adopting strategic procurement policies to make procurement
process transparent and most efficient.
 Status of ongoing projects to be made available online.
 E-procurement to be made compulsory for procurements worth
` 25 lakhs and more.
 Launching online registration of demands for wagons in next
two months for facilitating online payment of Wagon
registration fee.
 Initiating process for ERR (Electronic Railway Receipt) during the
year.
 Introduction of corrosion-free wagons with low tare weight for
movement of salt.
 Close monitoring of Dedicated Freight Corridor Project
Implementation of Eastern and Western DFCs; Target of nearly
1000 kms of civil construction contracts.
Metropolitan/Suburban Services
 Passenger centric focus to urban transport infrastructure by
coordinating with other transport Ministries and Urban Bodies.
 864 additional state-of-the-art EMUs for Mumbai in two years.
 Study to explore possibility of enhancing existing IR network of
Bengaluru for meeting better connectivity needs of Bengaluru
city with its suburban areas and hinterland.
 Byyappanahalli in Bengaluru area to be developed as a coaching
terminal.
Financial Performance 2013-14
 Traffic growth declined and expenditure registered excess in
2013- 14 as compared to Revised Estimates.
 Originating passengers achieved less by 46 million; and
passenger earnings short by ` 968 cr over Revised Estimates.
 Gross Traffic Receipts at ` 1,39,558 cr though short of RE by ` 942
cr grew by 12.8% over the previous year.
 Ordinary Working Expenses and Pension outgo is higher than the
Revised Estimates.
 The year ended with a surplus of ` 3,783 cr by registering a
shortfall of `4,160 cr over the revised target.
 Dividend liability of ` 8,010 cr to government fully discharged.
 Railways generated internal resources of ` 11,710 cr in 2013-14
for plan finance.
 Operating Ratio at 93.5% deteriorated by 2.7% over R.E.
Budget Estimates 2014-15
 Freight loading of 1101 MT, 51 MT more than 2013-14.
 Growth in passenger traffic - 2%.
 Freight Earnings – ` 1,05,770 cr.
 Passenger Earnings – ` 44,645 cr, after revenue foregone of `
610 cr on account of rollback in monthly season ticket fares.
 Total Receipts - ` 1,64,374 cr; Total Expenditure – ` 1,49,176 cr;
 Pension estimated at ` 28,850 cr.
 Dividend payment estimated at ` 9,135 cr.
 Operating Ratio to be 92.5%, an improvement of 1% over 2013-
14.
Annual Plan 2014-15
 Highest ever plan outlay of ` 65,445 cr.
o Gross Budgetary Support - ` 30,100 cr
o Railway Safety Fund - ` 2,200 cr
o Internal Resources - ` 15,350 cr.
o EBR - Market Borrowing - ` 11,790 cr;
o EBR - PPP - ` 6,005 cr.
The Economic Survey prepared by the Finance Ministry’s Chief
Economic Adviser Mr. Arvind Subramanian on the state of Asia’s third-
largest economy was tabled in Parliament on Feb 27, 2015.
As per the Survey, India must adhere to medium-term fiscal deficit
target of 3% of the country’s gross domestic product (GDP) and the
37
 Plan Outlay under budgetary sources placed at ` 47,650 cr which
is higher by ` 9,383 cr over 2013-14 – higher plan outlay goes to
safety related works.
 Full financial outlays to projects targeted for completion during
the year.
 Adequate allocations made for 30 priority works for timely
completion.
Projects for Remote Areas, North-East, Andhra Pradesh and
Telengana
 Higher funds for onging 23 projects in Northeast including 11
National Projects; ` 5,116 cr outlay earmarked for projects of
Northeast i.e. 54% higher than previous year.
 Udhampur-Katra Rail link dedicated to the Nation; tie up with
Government of J&K for bridging Udhampur-Banihal portion by
bus to help passengers reach Srinagar with single ticket from
origin to destination.
 Focus on completion of missing link of Banihal to Katra.
 29 Projects, costing ` 20,680 cr, currently running in Andhra
Pradesh & Telengana.
 Setting up of Committee of Railways and officials from Andhra
Pradesh and Telengana on coordination, requirement and issues.
New Surveys
 18 new line surveys.
 10 surveys for doubling, 3rd and 4th lines and gauge conversion.
Trains
 5 new Jansadharan trains to be introduced.
 5 Premium and
 6 AC trains to be introduced.
 27 new Express trains to be introduced.
 8 new passenger services, 5 DEMU services and 2 MEMU
services to be introduced and run of 11 trains to be extended.
ECONOMIC SURVEY 2015
government should ensure expenditure control to reduce fiscal deficit,
the report suggests.
Highlights of Economic Survey
· NITI Aayog and 14th Finance Commission to enhance fiscal
federalism
· GDP growth seen at 8.1–8.5% in 2015-16
· Double digit growth trajectory; 8–10% GDP in coming years
· Inflation has declined by over 6 percentage points since late 2013.
Consumer inflation in 2015-16 to be between 5-5.5%
· 4Ds — Deregulation, Differentiation, Diversification, Disinter (better
bankruptcy laws) — to push financial sector growth
· Ecommerce sector to witness 50% growth in 5 years
· Current Account Deficit down from a peak of 6.7% of GDP to an
estimated 1% in 2014-15
· To adhere to fiscal deficit target of 4.1 % of GDP; to aim for 3 %
· Food-grains production for 2014-15 estimated at 257.07 million
tonnes; will exceed last 5-year average by 8.5 million ton
· Foreign portfolio flows have stabilized the rupee
· After a nearly 12-quarter phase of deceleration, real GDP has been
growing at 7.2% since 2013-14, based on the new growth estimates of
the
· Notwithstanding the new estimates, the balance of evidence
suggests that India is a recovering, but not yet a surging economy
Economic Survey .. continued from adjoining colums
· Going forward inflation is likely to remain in the 5-5.5% range,
creating space for easing of monetary conditions.
· Using the new estimate for 2014-15 as the base, GDP growth at
constant market prices is expected to accelerate to between 8.1 and
8.5% in 2015-16.
· There is a case for reviving targeted public investment as an engine
of growth in the short run to complement and crowd-in private
investment
· India faces an export challenge, reflected in the fact that the share of
manufacturing and services exports in GDP has stagnated in the last
five years.
· India must adhere to the medium-term fiscal deficit target of 3
percent of GDP
· India must move toward the golden rule of eliminating revenue
deficits
· The quality of expenditure needs to be shifted from consumption to
investment.
· The direct fiscal cost of all the subsidies is roughly Rs. 378,000 crore
or 4.2 percent of 2011-12 GDP.
· 41% of PDS kerosene is lost as leakage and only 46% of the remaining
59% is consumed by poor
· The JAM Number Trinity – Jan DhanYojana, Aadhaar, Mobile – can
eliminate leakages and distortion
· The stock of stalled projects stands at about 7% of GDP, accounted
for mostly by the private sector.
· Manufacturing and infrastructure account for most of the stalled
projects. This has weakened the balance sheets of the corporate
sector and public sector banks,
· Indian banking balance sheet is suffering from ‘double financial
repression’
· Going forward, capital markets and bond-financing need to be given
a boost.
· Private sector banks did not partake in the biggest private-sector-
fuelled growth episode in Indian history during 2005-2012
· India has not one, not 29, but thousands of agricultural markets
· APMCs levy multiple fees of substantial magnitude that are non-
transparent

Chapter-5
BANKING TERMINOLOGY
A
Account Agreement: A sworn statement in writing before a proper official, such as a notary
The contract governing your open-end credit account, it provides public.
information on changes that may occur to the account.
Alteration:
Account History: Any change involving an erasure or rewriting in the date, amount, or
The payment history of an account over a specific period of time, payee of a check or other negotiable instrument.
including the number of times the account was past due or over limit.
American Depository Receipts (ADRs):
Account Holder: ADRs/GDRs are receipts (not shares) issued by an American
Any and all persons designated and authorized to transact business on Depository or any Global Depository to investors, giving them the title
behalf of an account. Each account holder's signature needs to be on to underlying shares of a company. These receipts are listed by the
file with the bank. The signature authorizes that person to conduct company issuing the ADR/GDR on foreign exchanges (in American
business on behalf of the account. exchanges, it is called ADR and called GDR-or Global Depository
Receipts if listed in international exchanges) and traded just like a
Acquiring Bank: share. An ADR/GDR can represent any number of underlying shares.
In a merger, the bank that absorbs the bank acquired. Accrued All ADRs are a form of GDR. Corporates are allowed to access foreign
interest: Interest due from issue date or from the last coupon equity capital in the form of ADR/GDR under an automatic route.
payment date to the settlement date. Accrued interest on bonds must
be added to their purchase price. Amortization:
The process of reducing debt through regular installment payments of
Adjustable-Rate Mortgages (ARMS): principal and interest that will result in the payoff of a loan at its
Also known as variable-rate mortgages. The initial interest rate is maturity. The term is also used as a synonym for Depreciation.
usually below that of conventional fixed-rate loans. The interest rate
may change over the life of the loan as market conditions change. Anytime Banking:
There is typically a maximum (or ceiling) and a minimum (or floor) With introduction of ATMs, Tele-Banking and internet banking,
defined in the loan agreement. If interest rates rise, so does the loan customers can conduct their business anytime of the day and night.
payment. If interest rates fall, the loan payment may as well. The 'Banking Hours' is not a constraint for transacting banking
business.
Arbitrage:
Buying a financial instrument in one market in order to sell the same Anywhere Banking :
instrument at a higher price in another market. Refers to banking not only by ATMs, Tele-Banking and internet
banking, but also to core banking solutions brought in by banks where
Adverse Action: customer can deposit his money, cheques and also withdraw money
Under the Equal Credit Opportunity Act, a creditor's refusal to grant from any branch connected with the system. All major banks in India
credit on the terms requested, termination of an existing account, or have brought in core banking in their operations to make banking truly
an unfavorable change in an existing account. anywhere banking.

Adverse Action Notice: Annual Percentage Rate (APR):

The notice required by the Equal Credit Opportunity Act advising a The cost of credit on a yearly basis, expressed as a percentage. Annual
credit applicant or existing debtor of the denial of their request for Percentage Yield (APY): A percentage rate reflecting the total amount
credit or advising of a change in terms considered unfavorable to the of interest paid on a deposit account based on the interest rate and
account holder. the frequency of compounding for a 365-day year.

AER: Annuity:
Annual earnings rate on an investment. A life insurance product which pays income over the course of a set
period. Deferred annuities allow assets to grow before the income is
Affidavit:

38
received and immediate annuities (usually taken from a year after
purchase) allow payments to start from about a year after purchase. Asset Liability Management (ALM):
Denotes a scientific way of measuring, monitoring and managing the
APR: various risks banks or financial institutions are exposed during the
The annual percentage rate of interest, usually on a loan or mortgage, course of their operations. Earlier banks had concentrated essentially
usually displayed in brackets and representing the true cost of the on credit and investment portfolios and liquidity and profitability were
loan or mortgage as it shows any additional payments beyond the given prime importance in the distribution of assets. Accumulation of
interest rate. mismatches among items on balance sheet and off balance sheet
accounts often led to liquidity crisis and even insolvency. In the
Approved Securities: process of globalisation of economy, the domestic markets get
Approved securities are those issued by the Government and local affected by developments in the international financial and exchange
bodies as also securities enjoying the guarantee of the Government in markets which expose banks to various kinds of risks. Risk
regard to payment of principal and interest. Such securities included in management involves continuous process of planning, organising and
the computation of Statutory Liquidity Ratio (SLR), besides controlling the volumes, maturities, rates and yields of assets and
Government securities are bonds of IDBI, NABARD, IFCI, SFCs, liabilities. To help achieve this the RBI has issued Asset Liability
cooperative debentures, Debentures of Electricity Board etc. Management guidelines to form part of the management of credit,
market and operation risks. Thrust of ALM is on managing market risk.
Application:
Under the Equal Credit Opportunity Act (ECOA), an oral or written Asset Reconstruction Companies (ARCs):
request for an extension of credit that is made in accordance with the These companies specialise in the recovery and liquidation of sticky
procedures established by a creditor for the type of credit requested. assets of the banks and financial institutions. The non-performing
assets can be assigned to ARC by banks at discounted price. In India
Appraisal: the Committee on Financial Systems (1991) recommended creation of
The act of evaluating and setting the value of a specific piece of Asset Reconstruction Fund (ARF). The committee on Banking Sector
personal or real property. Reforms (1998) suggested creation of Asset Reconstruction Company
to which sticky advances of banks can be transferred. ARF was also
ARBITRAGE: considered essential as part of the comprehensive restructuring of
The process of buying a thing in one market and selling it at the same weak banks. In pursuance of all this a legislation to regulate
time in another market, in order to take advantage of the price Securitisation and Reconstruction of Financial Assets and Enforcement
difference. of Security interest was passed by the Parliament.

Ask Price: Asset Securitisation:

The lowest price at which a dealer is willing to sell a given security.
Asset Backing for Issue of Notes:
The RBI Act stipulates that the assets of the Issue Department against
which currency notes are issued have to consist of gold coin and
bullion, foreign securities, rupee coin, Government of India rupee
securities of any maturity and bills of exchange and promissory notes
payable in India which are eligible for purchase by the bank. So far
such bills have not formed part of the assets of the Issue Department.
The aggregate value of gold coin and gold bullion and foreign
securities held in the Issue Department should not at any time be less
than Rs 200 crore; of this, value of gold, not to be less than Rs 115
crore. There is no ceiling on the amount of notes that can be issued by
the Reserve Bank at any time.
Asset Classification:
A recommendation of high level Committee on Financial System
(Narasimham Committee) is that the policy of income recognition
should be objectively based on record of recovery. International
practice is that an asset is treated as non-performing when interest is
overdue for at least 90 days. Recognising the need that a balance
sheet should reflect a bank's actual financial health, a system for
recognition of income, classification of assets and provisioning for bad
debts on a prudential basis was introduced. The assets portfolio of the
banks is required to be classified as
(1) Standard assets
(2) Sub-standard assets
(3) Doubtful assets and
(4) Loss assets. Standard asset is one that does not disclose any
problems and which does not carry more than normal risk attached to
the business .An asset which has been classified as NPA for a period
not exceeding 12 months is considered as sub-standard asset.
Doubtful asset is one which has remained NPA for a period exceeding
12 months. An asset which is considered uncollectable and loss has
been identified by the bank or internal or external auditors or the RBI
inspection and the loss has not been written off is regarded as loss
asset.
It is a process by which non-tradable assets are converted into
tradable securities. Illiquid assets such as mortgage loans, auto loan
receivable, cash credit receivables etc. on the balance sheet of the
originator (such as Housing Finance Companies, Financial Institutions,
banks etc.) are packaged, underwritten and sold in the form of
securities to investors through a carefully structured process. These
securities could be in the form of Commercial Paper, Participation
Certificates, Notes or any other form of security permissible under the
legal framework of the country. In a securitisation process, the
underlying assets are used both as collateral and also to generate the
income to pay the principal and interest to the investors of the asset
backed securities.
Asset-Backed Securities (ABS): A type of security that is backed by a
pool of bank loans, leases, and other assets. Most ABS is backed by
auto loans and credit cards – these issues are very similar to
mortgage-backed securities.
At-the-money:
The exercise price of a derivative that is closest to the market price of
the underlying instrument.
ATM:
ATMs are Automatic Teller Machines, which do the job of a teller in a
bank through Computer Network. ATMs are located on the branch
premises or off branch premises. ATMs are useful to dispense cash,
receive cash, accept cheques, give balances in the accounts and also
give mini-statements to the customers.
Autonomy:
Autonomy of Central Bank is generally understood with reference to
the degree of freedom a Central Bank enjoys in the formulation and
implementation of monetary and banking policies. The Central Banks
perform various roles such as banker to Government, banker to banks,
issuing bank notes, management of public debt, managing foreign
exchange reserves of the country, and regulation of banks and
financial institutions. Central Banks' independence relate to three
matters namely, personnel; financial (extent of finance to Govt;) and

39
conduct of monetary policy. How far the Central Bank be independent provided customer services, such as direct deposit of customers'
of Government in matters of policies and what form should that salaries and government benefit payments (i.e., social security,
independence take? The views vary from the position that Central welfare, and veterans' entitlements), and preauthorized transfers.
Bank should be given absolute statutory independence from the Govt,
both in determination and implementation of policies after listening Automated Teller Machine (ATM):
to various opinions, to that it would be thoroughly undesirable for the A machine, activated by a magnetically Comment encoded card or
bank to pursue policies, which did not have the concurrence and other medium that can process a variety of banking transactions.
support of the Govt. and Parliament. In practice, the Central Bank, These include accepting deposits and loan payments, providing
while having powers to formulate policies is ultimately subordinate to withdrawals, and transferring funds between accounts.
government and is required to keep Govt informed of their policies
and obtain specific government approvals for particular policies. Automatic Bill Payment:
A checkless system for paying recurring bills with one authorization
Authorised Capital: statement to a financial institution. For example, the customer would
It is the amount of share Capital fixed in the Memorandum of only have to provide one authorization form/letter/document to pay
Association and the article of association of a company as required by the cable bill each month. The necessary debits and credits are made
the companies Acts (Company Law). It is also known as nominal capital through an Automated Clearing House (ACH).
or registered capital.
Availability Date:
Authorised Dealer: Bank's policy as to when funds deposited into an account will be
Scheduled commercial banks and other banks and financial available for withdrawal.
institutions authorised to deal in foreign exchange are known as
authorised dealers. The Reserve Bank has been delegating powers to Availability Policy:
authorised dealers for undertaking foreign exchange transactions Bank's policy as to when funds deposited into an account will be
without obtaining Bank's prior approval available for withdrawal.

Authorization: Available Balance:

The issuance of approval, by a credit card issuer, merchant, or other The balance of an account less any hold, uncollected funds, and
affiliate, to complete a credit card transaction. restrictions against the account.

Automated Clearing House (ACH): Available Credit:

A computerized facility used by member depository institutions to The difference between the credit limit assigned to a cardholder
electronically combine, sort, and distribute interbank credits and account and the present balance of the account.
debits. ACHs process electronic transfers of government securities and
B
Banks:
A bank is a financial institution and a financial intermediary that Balance of Payment Account:
accepts deposits and channels those deposits into lending activities, A country's balance of international payment is a systematic
either directly or through capital markets. A bank connects customers statement of all economic transactions between the country and the
that have capital deficits to customers with capital surpluses. rest of the world The statistical statement for a period mainly show (1)
transactions in goods, services and income between the economy and
Banking: the rest of the world, (2) changes of ownership and other changes in
Accepting for the purpose of lending or investment of deposits of that economy's monetary gold, Special Drawing Rights (SDRs) and
money from Public, Repayable on demand or otherwise and withdraw claims and liabilities to the rest of the world. Like other accounts, the
able by cheques, drafts, order, etc. balance of payments records each transaction either a plus or a minus.
If a transaction earns foreign currency for the nation it is called a
Banking System: credit and if a transaction involves spending foreign currency it is
Banking system consists of commercial banks and cooperative banks. debit. The two major components of balance of payments are balance
The former include Indian banks in public sector, private sector and on current account and balance on capital account. Balance on current
foreign banks. Among the commercial banks, public sector banks (The account summarises the difference between nation's total exports and
State Bank of India and its associate banks and the 20 Nationalised imports of goods and services and capital account balance depicts
banks) account for predominant share of bank deposits. Private sector changes in loans or investments that private citizens or government
banks-old as well as the new banks, which came into being following make or receive from foreign private citizen or governments. Since
the recommendation of Committee on Financial System 1991 to each country's capital and current accounts have to sum to zero the
induce greater competition and efficiency-are banking companies and counterpart of the surplus or deficit would be capital flows and
are governed by the provisions of Banking Regulation Act 1949. The change in reserves.
century old cooperative banking structure providing banking access to
the rural masses is federal in character. State cooperative banks, Balance of Trade:
district central cooperative banks and primary agricultural societies International trade is made up of purchase and sale of goods between
specialise in short-term credit while state cooperative agriculture and countries and are collectively called imports and exports. Exports and
rural development banks and primary cooperative agriculture and imports are visible trade. The difference between exports and imports
rural development banks provide long term loans and advances. is called balance of trade. The balance of trade is favourable when the
Urban banks finance small business in urban and semi urban areas. value of exports exceeds imports (trade surplus) and unfavourable or
Regional Rural Banks are subsidiaries of commercial bank which are adverse when value of imports exceed exports (trade deficit).
specially set up in rural areas to provide credit and other facilities to Transactions in services relate to payment and receipt for services
weaker sections for productive activities in agriculture, trade, industry, such as shipping, insurance, travel and tourism, transfer of interest,
etc. Besides there are a few Local Area Banks functioning in a few migrant remittances, interest and dividend payments, etc. These
states. The government owned post office savings bank is a distinct services are called invisibles. Trade in goods and services constitute
entity in the sense that it is oriented towards mobilisation of small the current account. In addition, there are capital transactions in the
savings of the community and does not undertake lending activity. form of payments and receipts due to transfer of funds for acquiring

40
assets, extension of credits and loans, investments etc. These three scheme, Banking Ombudsman endeavours to resolve disputes by way
groups of economic transactions constitute the balance of payments of arbitration between one bank and its constituents, as well as
of a country. between one bank and another bank as may be agreed upon by the
contesting parties in accordance with the provisions of the B.O
Bank Credit to Commercial Sector: scheme and Arbitration and Conciliation Act.
This denotes credit extended by RBI to commercial sector by investing
in shares/bonds of financial institutions, ordinary debentures of Bank for International Settlements (BIS):
cooperative institutions and loans to financial institutions and bills The Bank for International Settlements was set up in 1930 and is
discounted by commercial banks with RBI and other banks. Other situated in Basle. Under article 3 of the Bank's statute, the basic object
bank's credit to commercial sector is in the form of loans, cash credit, is to promote cooperation among central banks and as such is
overdrafts, bills discounted and investment in approved securities and designated as "Central Banks' Bank". It carries out a wide range of
other investment. banking operations arising from the task of assisting the Central Banks
in managing and investing their monetary reserves. It promotes
Bank Credit to Government: international monetary cooperation facilitating exchange of views
Reserve Bank Credit to Government is the sum of the claims of the about international banking and monetary system among the central
bank on the Central Government in the form of holdings of dated bankers and central bank experts. BIS is also a research centre
securities, ways and means advances, Treasury Bills and rupee coins. particularly in the monetary sphere. BIS acts as trustee or agent for a
These assets less the Centre's cash balances with the RBI give Net RBI number of international bodies or arrangements, in the execution of
Credit to Central Government. Net RBI Credit to State Governments international payment agreements. The BIS currently has 55 member
comprises loans and advances to state Governments, less their central banks.
deposit balance with banks. Other banks' credit to Government
represents their investments in long term and short- term Bancassurance:
Government securities. Bank credit to Government is one of the Bancassurance is an important channel of distribution of insurance
factors explaining the variations in money supply. Other factors giving policies, wherein banks own and sell the insurance products and bear
rise to change are RBI credit to commercial sector, other banks' credit the risk- in India however, through this channel, policies are sold by
to commercial sector, government's currency liabilities, net foreign bank staff at the bank counters, but are not owned by the banks. This
exchange asset of RBI and other banks, and net non-monetary channel is jointly used by banks and the insurance companies.
liabilities of RBI and banks.
Base Rate:
Bank Rate: From July 1 2010, banks will move to a new, more transparent regime
An instrument of general credit control and represents the standard of loan pricing. They will jettison the Benchmark Prime Lending Rate
rate at which the RBI is prepared to buy or rediscount bills of exchange (BPLR) and price loans off a 'base rate'. Unlike the BPLR that was set
or other commercial paper eligible for purchase under the provisions somewhat arbitrarily by banks, the base rate will follow an explicit
of the Act. The Bank Rate influences the cost of financial formula that factors in a bank's cost of deposits, operating costs
accommodation extended by RBI. The impact of a change in the Bank (expenses of running its branches, for instance), the cost of statutory
Rate depends upon such factors as the extend of commercial banks' drafts on bank funds imposed by the Reserve Bank of India (the Cash
dependence on the Reserve Bank for funds, the availability of funds to Reserve Ratio and Statutory Liquidity Ratio) and the profit margin. The
banks from other sources, the extent to which other interest rates are base rate will help borrowers to compare interest rates offered by
directly influenced by changes in the Bank Rate, and the degree of various banks and make the process of how banks arrive at interest
importance attached to a change in the Bank Rate as an indicator of rates for loans more transparent. RBI has stipulated that banks cannot
the stance of monetary policy. charge below the base rate for most loans. (There are a couple of
exceptions like agricultural loans and export credit.) While the new
Banking Codes and Standad Board of India (BCSBI): model will ensure greater transparency, it need not mean lower
This Board was set in pursuance of a recommendation of the lending rates for borrowers. In fact, banks' blue-chip corporate
Committee on Procedures and Performance Audit on public services borrowers could see some increase in their cost of borrowing. The
to benchmark the existing level of public services in the banking reason is somewhat simple. RBI allowed banks to lend below their
sector. This is an autonomous body established by the RBI and the prime lending rates and the majority of banks did the bulk of their
banks to evaluate and oversee the observance of voluntary code of corporate lending at 'sub-PLR rates'.
conduct by the banks. The purpose is to ensure that comprehensive
code of conduct for fair treatment of customers is evolved and Basel Committee on Banking Supervision (BCBS):
adhered to. As a part of the collaborative arrangement, the Reserve The Basel Committee is a committee of bank supervisors drawn from
bank would build up corpus of BCSBI to make it a self-sustaining 13 member countries (Belgium, Canada, France, Germany, Italy, Japan,
organisation. Luxembourg, The Netherlands, Spain, Sweden, Switzerland, United
Kingdom and United State of America). It was founded in 1974 to
Banking Ombudsman Scheme: ensure international cooperation among a number of supervisory
The Banking Ombudsman Scheme was introduced in 1995 under the authorities. It usually meets at the Bank for International settlements
provision of Banking Regulation Act 1949 covering scheduled in Basel, Switzerland, its permanent Secretariat. The Committee
commercial banks and scheduled primary cooperative banks and framed two Capital Accords, Basel I (1988) and Basel II (1999).
Regional Rural Banks having business in India. The scheme is intended
to establish a system of Banking Ombudsman for expeditious and Banker's Lien:
inexpensive resolution of customer complaints. Any person whose Bankers lien is a special right of lien exercised by the bankers, who can
grievance against a bank is not resolved to his satisfaction with in a retain goods bailed to them as a security for general balance of
period of two months after the bank received the complaint can account. Bankers can have this right in the absence of a contract to
approach the Banking Ombudsman if the complaint of the deficiency the contrary.
of service is pertaining to any of the matters specified in the scheme.
Presently 15 Banking Ombudsman Offices administer the scheme in Brick & Mortar Banking:
the country. Apart from enabling resolution of complaints relating to Brick and Mortar Banking refers to traditional system of banking done
provision of banking services by mediating between the bank and the only in a fixed branch premises made of brick and mortar. Now there
aggrieved party or by passing an award in accordance with the are banking channels like ATM, Internet Banking, tele banking etc.

41
 Savings Income Bonds. Bonds are usually carry fixed interest and may
Business of Banking : be irredeemable and may be secured or unsecured. Economists
Accepting deposits, borrowing money, lending money, investing, frequently make use of the term bond in theoretical analysis, for
dealing in bills, dealing in Foreign Exchange, Hiring Lockers, Opening example of choices between holding cash and other financial assets, in
Safe Custody Accounts, Issuing Letters of Credit, Travelers’ Cheques, which a bond is a proxy for a whole range of securities.
doing Mutual Fund business, Insurance Business, acting as Trustee or
doing any other business which Central Government may notify in the Bull:
official Gazette. He is Stock Exchange speculator who purchases Stocks and Shares in
the belief that prices will rise and that he will be able to sell them
Bouncing of a cheque: again later at a profit. Bull is the opposite of Bear. The market is said
Where an account does not have sufficient balance to honour the to be bullish when it is generally anticipated that prices will rise.
cheque issued by the customer, the cheque is returned by the bank
with the reason "funds insufficient" or "Exceeds arrangement”. This is Bullion:
known as 'Bouncing of a cheque’. It means gold, silver, or other precious metal in bulk, i.e. in the form of
ingots or bars rather than in coin. Gold billion is used in international
Basis Point: monetary transactions between Central Banks and forms partial
One hundredth of 1%. A measure normally used in the statement of backing for many currencies. A bullion market is a Gold Market.
interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis
points. Bear:
A Bear is an investor who reasons out the southward movement of
Bear Markets: share prices thereby limits oneself to trade of short-term nature. A
Unfavourable markets associated with falling prices and investor stock market operator who expects share prices to fall and keeps
pessimism. selling (to pick up the shares later a lower price for actual delivery),
causing selling pressure and lowering the prices further. Term derived
Bid-ask Spread: from the attacking posture of the bear, pushing downwards.
The difference between a dealer’s bid and ask price.
Budget Deficit:
Bid Price: The excess of government expenditure over government income,
The highest price offered by a dealer to purchase a given security. which must be financed either by borrowing or by printing money.
Budget deficit is measured by calculating the total expenditure over
Benchmark Prime Lending Rate (BPLR): and above the total receipts.
Prime Lending Rate calculated after considering cost of funds,  Budget Deficit = total Receipts (Revenue + Capital) – Total
operating expenses, regulatory provisioning, capital charge and profit Expenditure (Revenue + Capital) . Comment
margin. It forms the reference rate for pricing of loans and advances.  Revenue receipts: Receipts from tax, interest from loans provided
by the Government, dividends, profits from Public Sector
Bill: Undertakings (PSUs) and grants.
It is a document which gives evidence of in-debtedness of one party to  Capital receipts: Receipts from repayment of loans by the State
another. A bill may simply be written order for goods which can be Governments, PSUs, sale of Government assets.
used as security for a loan to the supplier from a bank, or it may be a  Revenue expenditure: Salaries, interest payment, subsidies,
security such as a Treasury Bill or Bill of Exchange. pension.
 Capital expenditure: Loan and advances to State Governments
Blue Chip: and PSUs and capital outlay.
It is a first-class Equity share, the purchase of which (the hope is)
entails little risk even in economic recessions (Depression). The term Book Value:
is, of course, applied as a matter of subjective judgement. The amount of stockholders’ equity in a firm equals the amount of the
Board for Financial Supervision: firm’s assets minus the firm’s liabilities and preferred stock.
This was constituted in November 1994, under the Central Board of
Directors of RBI with a view to give undivided attention to supervision Broker:
of banks, all India financial institutions and NBFCs . It functions within Individuals licensed by stock exchanges to enable investors to buy and
the framework of RBI (BFS) Regulation 1994 exclusively framed for the sell securities.
purpose in consultation with Government of India. The Governor of
RBI is the Chairman of the Board and four nonofficial directors of the Brokerage Fee:
Central Board are the members. The Deputy Governors of RBI are the The commission charged by a broker.
Ex-officio members.
Bull Markets:
Bond: Favourable markets associated with rising prices and investor
It is a form of fixed-interest Security issued by central or local optimism.
governments, companies, banks or other institutions, e.g. National
C
Call Money/ Notice Money Market:
Refers to a segment of money market where participants lend and Call Option:
borrow money on an overnight basis. The notice money market The right to buy the underlying securities at a specified exercise price
provides for lending and borrowing of money at a short notice for on or before a specified expiration date.
periods up to 14 days. Since 1992 many financial institutions like IDBI,
NABARD, mutual funds, GIC and subsidiaries were allowed to Callable Bonds:
participate in the call money market. On the recommendations of the Bonds that give the issuer the right to redeem the bonds before their
Narasimham committee 1998, the non-bank participation in the stated maturity.
market has been phased out in order to make it a pure inter-bank
call/notice money market including primary dealers. Capital:

42
It refers to assets which are capable of generating income and which parent entity within a banking group, to ensure that it captures the
have themselves been produced. Capital is one of the four Factors of risk of the whole banking group. As one of the principal objectives of
Production, and consists of the machines, plant and buildings that supervision is the protection of depositors, supervisors have to test
made production possible, but excludes raw materials, land and that individual banks are adequately capitalized on a standalone basis.
labour. In more general usage, it refers to any assets or stock of assets
(financial or physical) capable of generating income. Capital Expenditure:
It is the purchase of fixed assets (e.g. plant and equipment),
Capital Account Convertibility (CAC): expenditure on Trade Investments, acquisitions of other businesses
Convertibility means the ability of the domestic residents to convert and expenditure on current assets (e.g. stocks).
the local currency to any foreign currency at will. The Report of the
Committee on Capital Account Convertibility (Tarapore Committee) Capital Market :
(RBI, 1997) provided the following working definition of CAC: Capital market deals with long term funds which can be raised either
"freedom to convert local financial assets into foreign financial assets through issue of securities or by borrowing from certain institution.
and vice versa at market determined rates of exchange. It is Capital market can be divided into two parts viz, for corporate
associated with changes of ownership in foreign / domestic financial securities and other gilt edged securities (securities issued by Central
assets and liabilities and embodies the creation and liquidation of Government, State Government and quasi-govt. Bodies).
claims on, or by, the rest of the world. CAC can be, and is, coexistent
with restriction other than on external payments". Broadly it would Capital Formation:
mean freedom for firms and residents to buy overseas assets such as Refers to that part of a country's current output and imports which is
equity, bonds, property and acquire ownership of overseas firms, not consumed or exported during the accounting period but set aside
besides free repatriation of proceeds by foreign investors. as additions to its stock of capital goods for use in future productive
process - machinery, equipment, plants, buildings, stock of raw
Capital Adequacy: material, semi-finished goods, etc. Net capital formation is
In the context of growing size and variety of banking transactions the distinguished from gross capital formation in that it is measured after
prescription of minimum fixed capital for banks (as well as financial allowances are made for depreciation, obsolescence and accidental
institutions) was considered inadequate The Committee on Banking damage to fixed capital.
Regulation and Supervisory Practices, set up by the Bank for
International Settlements (BASEL COMMITTEE) prescribed certain Capital Funds Of Banks:
capital adequacy standards taking into account the element of risk in Capital Funds comprise of Tier I capital and Tier II capital as defined
various types of assets in the balance sheet and off-balance sheet under Capital Adequacy Standards. Tier I capital mainly consists of
business. Under this system, the funded and non-funded items and Capital, Statutory reserves, Capital reserves etc, reduced by equity
other off-balance sheet exposures are assigned weights according to investments in subsidiaries, intangible assets etc. Tier II capital
the risk perception and banks are required to maintain unimpaired consists of undisclosed reserves, revaluation reserves, general
minimum capital funds to the prescribed ratio on the risk weighted provision and loss reserve, subordinate debt instruments etc.
assets. In India the Capital adequacy norms were adopted in 1992,
following the Basel Accord of 1988. This accord exclusively focussed Capital Market:
on credit risk. In the context of financial innovations and growing This is an important part of financial sector and refers to a system
complexity of financial transactions a new Capital Accord known as which provides for facilities and arrangements for borrowing and
Basel II was released by the Basel Committee on Banking Supervision. loaning of long term funds. The sources of funds for market are from
The revised framework helps banks to determine the capital household savings, corporate savings, institutional investments-
requirement for credit risk, market risk and operational risk. This foreign and domestic, the surpluses of government sector and non-
involves a 3-pillar approach of Minimum Capital Requirements, residents. Capital market consists of primary market and secondary
Supervisory Review Process and Market Discipline. market. The primary market or new issue market facilitates
mobilisation of resources through public issue (by prospectus) right
Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, issues (through letter of offer) and private placements. Apart from
System & Controls (Camels) : equity shares and preference shares, a number of innovative
Banks incorporated in India are supervised and awarded supervisory instruments have been lately introduced in the primary market. The
ratings under CAMELS model. The foreign banks operating in India are secondary market provides liquidity through marketability of these
rated under CALCS which stand for Capital Adequacy, Asset Quality, instruments.
Liquidity & Compliance and Systems. A system of supervisory rating
based on CAMELS is being used to assess the performance and Cash Reserve Ratio (CRR):
strength and soundness of banks. Cash reserve Ratio (CRR) is the amount of Cash(liquid cash like gold)
that the banks have to keep with RBI. This Ratio is basically to secure
Capital Accords (Related to Basel Norms): solvency of the bank and to drain out the excessive money from the
The Basel Committee on Banking Supervision published the first Basel banks. If RBI decides to increase the percent of this, the available
Capital Accord in July, 1988 prescribing minimum capital adequacy amount with the banks comes down and if RBI reduces the CRR then
requirement in banks and the signatory countries fully implemented available amount with Banks increased and they are able to lend
the accord by the end of 1992. In the subsequent years, increased more.
market volatility as well as incidents such as the Asian crisis, the near OR, This term refers to a policy instrument to control money supply.
collapse of a significant hedge fund in the US and the crisis in several The Reserve Bank of India Act requires the scheduled banks to
Latin American and emerging economies prompted a new look at the maintain a minimum average daily cash balance equivalent to a
1988 Capital Accord. Therefore, in July 1999, the Basel Committee specified percentage of their time and demand liabilities in India
released the first proposal to replace the 1988 Capital Accord with a outstanding as on the Friday of the previous fortnight. This is known
more risk sensitive capital adequacy framework. Capital Accord aims as Cash Reserve Ratio. The RBI is empowered to vary the Cash Reserve
to strengthen the soundness and stability of the International Banking Ratio between 3 percent and 20 percent depending on the prevalent
System and diminish existing source of competitive inadequacy among monetary conditions. Total cash reserves actually maintained by a
international banks. The framework will be applied on a consolidated scheduled commercial bank may consist of (1) the minimum CRR of
basis to internationally active banks. The scope of application will also 3% or prescribed CRR (2) additional cash reserves relating to
include, on a fully consolidated basis, any holding company that is the incremental demand and time liabilities (DTL) and (3) excess cash

43
reserves over and above the level required to comply with the Channel - Effect on domestic interest rates, when intervention is not
prescribed cash reserve requirement or short fall therein. Following fully sterilized;
the amendment of the Reserve Bank of India Act in 2006, the Reserve 2) Portfolio Balance Channel - Composition of domestic and foreign
Bank, keeping the needs of securing monetary stability in the country, assets held by the main market participants changes as a result of
can prescribe CRR for scheduled commercial banks without any floor sterilized intervention;
rate or ceiling rate. When there is a change in CRR, the first impact is 3) Signalling or Expectations Channel - Sterilized intervention changes
felt by the banks. For banks, a rise in CRR would mean that a larger private agents' exchange rate expectations by giving signals about the
proportion of their lendable resources will be with RBI, while a fall in future stance of monetary policy and
the rate will mean a lower proportion will be with the Central Bank. In 4) Order Flow or Micro Structure Channel - impact of intervention on
times of boom, lending will give a higher rate of return to banks. buy or sell orders of traders who follow past market trends.
Hence, if they have to keep a large proportion of their funds away
from lending and in the form of a deposit with the RBI, it is a loss of Cheque:
opportunity for them. This will bring down their earnings. An increase Cheque is a bill of exchange drawn on a specified banker ordering the
in CRR would also mean that money is being sucked out of the system. banker to pay a certain sum of money to the drawer of cheque or
This would mean that funds are hard to come by and hence banks will another person. Money is generally withdrawn by clients by cheques.
have to pay more to depositors in order to induce them to keep their Cheque is always payable on demand.
funds with banks. This will push up cost of funds for banks. The banks
therefore will also have to raise lending rates in order to meet the Cheque Truncation:
increased cost while maintaining their margins. There may also be an Cheque truncation truncates or stops the flow of cheques through the
overall impact on companies in terms of scarcity of funds, along with banking system. Generally truncation takes place at the collecting
an increase in costs, due to which the overall interest charges for branch, which sends the electronic image of the cheques to the paying
capital intensive companies will increase. A lower lending could lead branch through the clearing house and stores the paper cheques with
to a contraction in the activities which might slow down demand in it.
various sectors. Raising CRR is a measure used by the RBI to contain
inflation by mopping up excess liquidity in the economy. Clearing Corporation Of India LTD (CCIL):
This was set up in November 2002 to serve as an industry-wise
Capital Gain: organisation for clearing and settlement of trades in foreign exchange
The amount by which the proceeds from the sale of a capital asset government securities and other debt instruments. The CCIL manages
exceed its original purchase price. various risks and reallocates risks among the participants. CCIL
reduces the liquidity requirements of the market and thereby liquidity
Central Bank: risk of the system. Major commercial banks, financial institutions and
Conducting a special class of business distinct from commercial primary dealers own it.
banking, the primary function of Central Bank is to serve as a lender of
last resort so as to stabilise the banking system. In order to ensure Closed-end (Mutual) Fund:
monetary discipline and healthy growth of economy the Central Bank A fund with a fixed number of shares issued, and all trading is done
has been entrusted with function of monopoly of note issue, keeping between investors in the open market. The share prices are
the nation's gold and foreign exchange reserves, providing banking determined by market prices instead of their net asset value.
services to the government and other banks. The central bank is an
important source of advice on economic policy matters to the Collateral:
government. As the monetary authority it conducts monetary policy A specific asset pledged against possible default on a bond. Mortgage
to influence economic trends through the cost and availability of bonds are backed by claims on property. Collateral trusts bonds are
credit and regulates the operations of banks and non-banking financial backed by claims on other securities. Equipment obligation bonds are
companies. backed by claims on equipment.

Central Record And Documentation Centre (CRDC): Commercial Paper:

This was established in August 1981 in Pune with the object of serving
as a repository of noncurrent permanent records and as the central
archives of the Reserve Bank of India for research purposes. It
maintains an archival of RBI library, and provides for repairs and
rehabilitation of records of RBI in a scientific manner and research
facilities for the staff of the Bank as well as students from other
institutions.
Certificate Of Deposit:
It is a negotiable claim issued by a bank in return for a Term Deposit.
CDs are securities which are purchased for less than their face value,
which is the bank’s promise to repay the deposit and thus offer a yield
to maturity (YTM). The secondary market in CDs is made up by the
Discount Houses and the banks in the Inter-Bank Market. Where a
depositor knows that he can, if necessary, sell his CD he will be willing
to place his funds with a bank for long periods.
Certificate of Deposits (CDs):
Savings instrument in which funds must remain on deposit for a
specified period and premature withdrawals incur interest penalties.
Channels Of Influence Of Intervention In Exchange Rates: Channels Of
Influence Of Intervention In Exchange Rates: The four channels of
influence of intervention in exchange rates are: 1) Monetary Policy
Short-term and unsecured promissory notes issued by corporations
with very high credit standings.
Common Stock:
Equity investment representing ownership in a corporation; each
share represents a fractional ownership interest in the firm.
Compound Interest:
Interest paid not only on the initial deposit but also on any interest
accumulated from one period to the next.
Contract Note:
A note which must accompany every security transaction which
contains information such as the dealer’s name (whether he is acting
as principal or agent) and the date of contract.
Controlling Shareholder:
Any person who is, or group of persons who together are, entitled to
exercise or control the exercise of a certain amount of shares in a
company at a level (which differs by jurisdiction) that triggers a
mandatory general offer, or more of the voting power at general
meetings of the issuer, or who is or are in a position to control the
composition of a majority of the board of directors of the issuer.

44
Convertible Bond: provides the trading platform and market participants (Banks,
A bond with an option, allowing the bondholder to exchange the bond Financial Institutions, Insurance Companies, Mutual Funds, Primary
for a specified number of shares of common stock in the firm. A Dealers, NonBanking Financial Companies, and Corporations etc)
conversion price is the specified value of the shares for which the decide the rate at which it is issued and traded.
bond may be exchanged. The conversion premium is the excess of the
bond’s value over the conversion price. Commercial Paper (CP):
A money market instrument, this represents an unsecured usance
Corporate Bond: promissory note negotiable by endorsement and delivery. This
Long-term debt issued by private corporations. Coupon: The feature instrument was conceived as a short term substitute for working
on a bond that defines the amount of annual interest income. capital borrowing by the companies.

Coupon Frequency: Consumer Price Index (CPI):

The number of coupon payments per year. It is a measure estimating the average price of consumer goods and
services purchased by households. Consumer Protection Act: It is
Coupon Rate: implemented from 1987 to enforce consumer rights through a simple
The annual rate of interest on the bond’s face value that a bond’s legal procedure. Banks also are covered under the Act. A consumer
issuer promises to pay the bondholder. It is the bond’s interest can file complaint for deficiency of service with Consumer District
payment per dollar of par value. Forum for amounts upto Rs.20 Lacs in District Court, and for amounts
above Rs.20 Lacs to Rs.1 Crore in State Commission and for amounts
Covered Warrants: above Rs.1 Crore in National Commission.
Derivative call warrants on shares which have been separately
deposited by the issuer so that they are available for delivery upon Consolidated Supervision:
exercise. Consolidated Supervision refers to system whereby the RBI
undertakes consolidated supervision of bank groups (with related to
Credit Rating: entities) where the controlling entity is an institution (banks, financial
An assessment of the likelihood of an individual or business being able institution or NBFCs) which comes under the regulatory/supervisory
to meet its financial obligations. Credit ratings are provided by credit purview of the RBI. The components of consolidated supervision are
agencies or rating agencies to verify the financial strength of the issuer (1) Consolidated financial statements (CFs)
for investors. (2) consolidated prudential reports (CPR) and
(3) application of certain prudential regulations like capital adequacy,
Collecting Banker: large exposure, risk concentration etc. on group basis. CFs would
Also called receiving banker, who collects on instruments like a include consolidated balance sheet, profit and loss account and other
cheque, draft or bill of exchange, lodged with himself for the credit of statements including cash flow statements
his customer's account.
Co-operative Bank :
Code Of Banks Commitment To Customers: An association of persons who collectively own and operate a bank for
A code evolved by the Indian Banks' Association and Banking Codes the benefit of consumers / customers, like Saraswat Cooperative Bank
and Standard Board of India to provide a framework for minimum or Abhyudaya Co-operative Bank and other such banks.
standard of banking services which individual customers can
legitimately expect. It sets out a minimum standard of customer Co-operative Society :
service with reliability, transparency and accountability and outlines When an association of persons collectively own and operate a unit
how each bank expects to deal with the customers day to day for the benefit of those using its services like Apna Bazar Co-operative
requirements and accordingly what each customer should reasonably Society or Sahakar Bhandar or a Co-operative Housing Society.
expect from his bank. The code was released in July 2006.
Core Banking Solutions (CBS):
Coinage: Core Banking Solutions is a buzz word in Indian banking at present,
Coins are minted in the denominations of 10paise, 20paise, 25paise, where branches of the bank are connected to a central host and the
50paise, 1rupee, 2rupees, and 5rupees. Coins up to 50paise are called customers of connected branches can do banking at any breach with
small coins and other coins are termed as rupee coins As per the core banking facility.
provisions of Coinage Act 1906, coins can be issued up to
denominations of Rs 1000/-. The responsibility for coinage vests in the Corporate Governance:
Government of India in terms of Coinage Act 1906. The concept of Corporate Governance is differently defined. It means
doing every thing better to improve relationship between companies
Collateralised Borrowing And Lending Obligation (CBLO): or organisations and their shareholders and other stakeholders. It is
CBLO is a money market instrument. Conceptually, it is also defined as a system by which business operations are directed
(1) an obligation by the borrower to return the money borrowed, at a and controlled. It specifies the distribution of rights and
specified future date, responsibilities among different participants in the corporation such as
(2) an authority to the lender to receive money lent, at a specified the board, managers, shareholders and other stakeholders and spells
date and out the rules and procedures for making decision on corporate affairs.
(3) an underlying charge on securities held in the custody with According to the World Bank, Corporate Governance is about
Clearing Corporation of India Limited (CCIL) for amount borrowed. promoting corporate fairness, transparency, and accountability.
CBLO is a new money market instrument developed by CCIL. It is a Corporate governance is becoming crucial for banks and financial
hybrid of repo (backed by securities) and call money products (short institutions to promote effective risk management and financial
term). Consistent with the move to phase out non-bank participants stability. As part of financial sector reforms banks are required to
from the call money market, CBLO was introduced to facilitate follow due diligence procedures for appointment of directors on the
participation of non-bank entities in money market. Borrowing under boards of private sector banks and regarding role and responsibilities
CBLO is against the collateral of Government securities. CBLO also has of independent directors. Banks are also required to take steps to
certain other features such as maturity period ranging from 1day to strengthen risk management framework and constitute various
1year and is issued in electronic book entry form only. The CCIL committees in conformity with corporate governance. The purpose is

45
to ensure that owners and managers of banks are persons of sound requirement for a given exposure. The risk components include
integrity so as to protect the interest of depositors and integrity of measures of the probability of default (PD), loss given default (LGD),
financial system. the exposure at default (EAD) and effective maturity (M). Under IRB
Approach, the accord has made available two broad approaches: a
Coupon Rate: A coupon payment on a bond is a periodic interest foundation and an advanced. Under the foundation approach, as a
payment that the bondholder receives during the time between when general rule, banks provide their own estimates of PD and rely on
the bond is issued and when it matures. Coupons are normally supervisory estimates for other risk components. Under the advanced
described in terms of the coupon rate, which is calculated by adding approach, banks provide for more of their own estimates of PD, LGD
the total amount of coupons paid per year and dividing by the bond's and EAD and their own calculation of M, subject to meeting minimum
face value. For example, if a bond has a face value of $1000 and a standards.
coupon rate of 5%, then it pays total coupons of $50 per year. For the
typical bond, this will consist of two semi-annual payments of $25 Currency:
each. Paper currency, a medium of exchange, stands out as an important
landmark in the evolution of payment system for various transactions,
Creditworthiness: from the primitive barter of early societies to coins, credit cards and
It is the capacity of a borrower to repay the loan / advance in time electronic money. As against physical coins possessing intrinsic value,
along with interest as per agreed terms. the paper currency represents a promise to pay the physical
equivalent or the underlying value. In the West, currency was
Crossing of Cheques: introduced around the 17th century. In India up to 1861 from the
Crossing refers to drawing two parallel lines across the face of the latter part of the 18th century, banks were free to issue currency
cheque. A crossed cheque cannot be paid in cash across the counter, notes which were payable to bearer on demand. These promissory
and is to be paid through a bank either by transfer, collection or notes, convertible into coins on demand were termed as bank notes.
clearing. A general crossing means that cheque can be paid through Issue of official Government of India paper currency commenced in
any bank and a special crossing, where the name of a bank is indicated 1861 with the enactment of Paper Currency Act. With the formal
on the cheque, can be paid only through the named bank. inauguration of the Reserve Bank of India on 1-4-1935, the RBI took
over the function of issuing notes. The Indian currency is called Indian
Credit: rupee and sub-denomination is called the paise.
The term refers to the use of someone else's funds in exchange for a
promise to pay (usually with interest) at a later date e.g. short term Currency Board:
loans from a bank. In balance of payments accounting, it denotes an Currency Board issues currency in accordance with certain strict rules;
item such as exports that earns a country foreign currency. Bank credit the Board prints domestic currency and commits itself to converting it
is an important variable affecting consumption and capital formation. on demand to a specified currency at fixed rate of exchange. To make
this commitment credible the board holds reserves of foreign currency
Credit Policy: (or of gold or some other liquid asset) equal to at least 100%of the
Refers to the policy of using central banking instruments for varying domestic currency issue at the fixed rate of exchange. The Board
the cost, availability and direction of credit or "loans and discounts" issues currency only when there are enough foreign assets to back it.
extended by the banks to their customers. The capacity of banks to And it does little else; no open market operations; no lending to the
provide credit depends on their cash reserves (cash in hand and Government; no guarantee of banking system. The main advantage of
balances with Reserve Bank of India; substantial portion of the Currency Board Systems is it is easy to run. More over a Currency
reserves is held in the form of balance with RBI). These reserves Board compels Governments to adopt a responsible fiscal policy. If the
increase through a rise in the deposits of banks or their borrowings budget is not balanced the government has to persuade private banks
from Reserve Bank or a sale of their investments. Regulations of credit to lend to it. Bullying the Central bank to print money is no longer an
essentially mean regulation of quantum of reserves of banks. If the RBI option; the currency board therefore will tend to produce more
desires to bring about credit expansion it would adopt measures to prudent fiscal policies than a malleable Central bank will.
help augment reserves; if credit expansion is to be restricted,
measures to curtail the reserves are adopted. Currency Chests:
Currency chests are storehouses where bank notes and rupee coins
Credit Information Bureau Of India LTD (CIBIL): are stocked on behalf of the Reserve Bank of India. The Reserve Bank
This is an agency for compilation and dissemination of credit of India has authorised selected branches of banks to establish
information covering data on defaults to the financial system. Banks Currency Chests in order to facilitate distribution of notes and coins
and financial institutions are required to submit periodical requisite across the country through other bank branches in their area of
data to CIBIL and report to the RBI. With a view to strengthen the legal operation. The currency chest is like a miniature Issue Department and
mechanism and facilitating credit information bureau to collect, notes held in the chests are not deemed to be in circulation and the
process and share credit information on borrowers of banks /FIs the coins held in chest form part of Issue Department.
Credit Information Companies' Regulation Act was passed and came
into vogue with the President of India giving assent in June 2005. The Currency Management:
Act empowers CIBIL to collect information relating to all borrowers This function involves designing of currency notes, issue and
and confers upon the RBI the power to determine policy in respect of distribution of fresh notes and coins, management of inventory of
functioning of credit information companies. notes and accounting withdrawal of soiled notes from circulation and
Credit Risk Measurement: The Basel Accord permit Banks a choice their destruction, note exchange facilities and anti-counterfeit
between two broad methodologies for calculating their capital measures.
requirements for credit risk.
i) Standardised Approach: One alternative will be to measure credit Currency Options:
risk in a standardised manner, supported by external credit A contract where the purchaser of the option has the right but not the
assessment. obligation to either purchase (call option) or sell (put option) and the
ii) Internal Rating Based Approach: Subject to certain minimum seller (or writer) of the option agrees to sell (call option) or purchase
conditions and disclosure requirements, banks that have received (put option) an agreed amount of a specified currency at a price
supervisory approval to use IRB approach may rely on their own agreed in advance and denominated in another currency (known as
internal estimates of risk components in determining the capital

46
the strike price) on a specified date (European Option) or by an agreed the obligations of Article (Vii) of the International Monetary Fund to
date (American Option) in the future. refrain from imposing restrictions on the making of payments and
transfers for current international transactions. With the introduction
Currency Risk: of Current account convertibility, Authorised Dealers have been
The possibility that exchange rate changes will alter the expected delegated extensive powers to provide foreign exchange for current
amount of principal and return of the lending or investment. Currency account transactions purposes.
Verification And Processing System: This is an electronic mechanical
device designed for examination, authentication, counting, sorting and Customer:
online destruction of notes which are misfit for further circulation. The A person who maintains any type of account with a bank is a bank
system is capable of sorting the notes on the basis of denomination, customer. Consumer Protection Act has a wider definition for
design and level of shortage. Notes are sorted into fit, unfit, reject and Comment consumer as the one who purchases any service for a fee
suspect categories. like purchasing a demand draft or a pay order. The term customer is
defined differently by Laws, softwares and countries.
Current Account:
It is the most common type of bank account, on which deposits do Current Yield:
not earn interest, but can be withdrawn by cheque at any time. The A return measure that indicates the amount of current income a bond
bank charges according to the number of cheques through the provides relative to its market price. It is shown as: Coupon Rate
account and the credit balance. If the average balance is high, the divided by Price multiplied by 100%.
customer may pay no bank charges Current Account
Custody of Securities:
Convertibility: Registration of securities in the name of the person to whom a bank is
Refers to the process of easing restrictions on current international accountable, or in the name of the bank’s nominee; plus deposition of
transactions and liberalisation for payment of current transactions securities in a designated account with the bank’s bankers or with any
involving foreign exchange. This is formalised by the country accepting other institution providing custodial services.
D
Debit Card: Denotes persistent fall in general price levels of goods and services. It
A plastic card issued by banks to customers to withdraw money should not be confused with decline in prices in one economic sector
electronically from their accounts. When you purchase things on the or fall in inflation rate (known as disinflation). While productivity
basis of Debit Card the amount due is debited immediately to the driven deflation in which costs and prices are pushed lower by
account. Many banks issue Debit-Cum-ATM Cards. technological advances is beneficial to the economy that reflecting
sharp slump in demand, excess capacity and shrinking money supply is
Debtor: harmful to the economy.
A person who takes some money on loan from another person.
DELIVERY VERSUS PAYMENT:
DEBT RECOVERY TRIBUNALS (DRT): Execution of trade and trade settlements are the two stages involved
These tribunals are established under the Recovery of Debt due to in securities and funds transactions. There are two types of settlement
Banks and Financial Institutions Act 1993 for expeditious adjudication systems.
and recovery of debts due to Banks and financial institutions and for (i) Differed Net Settlements (DNS) and
connected matters or incidental there to. Cases of recovery can be (ii) Real Time Gross Settlements (RTGS)
filed by Banks and financial institutions with the DRT where the In DNS all claims and counter claims of participants are accumulated
amount of debt is not less than Rs 10 lakh. over a period of time and netted out to arrive a multilateral net
payment position. The RTGS on the other hand represents settlement
DEBT SERVICE RATIO: of any transaction involving claims and counter claims instantly on
The proportion of annual export revenue (from goods and invisibles) gross basis, thereby obviating the need for clearing arrangement.
of a country, which constitutes its repayment obligations of the While netting out under DNS reduces the liquidity requirement for the
principal and interest on external debt for the year. system, RTGS mechanism eliminates default risks. The application of
principles of RTGS in the context of securities settlement is called
DEBENTURE – Delivery Vs Payment System. In the case of Government securities
A debenture is basically an unsecured loan to a corporation. A type of transactions the selling banker signs a form for transfer of securities
debt instrument that is not secured by physical asset. Debentures are and the buying bank authorises transfer of funds from its account with
backed only by the general creditworthiness and reputation of the the RBI.
issuer.
i)Convertible Debentures: Any type of debenture that can be DEMAND FOR MONEY:
converted into some other security or it can be converted into stock.. A term often used in the context of the study of inters- relationship
ii)Non-Convertibility Debentures(NCB): Non Convertible Debentures between money, output and prices, to explain why individuals and
are those that cannot be converted into equity shares of the issuing business hold money balances. The important motivations for holding
company, as opposed to Convertible debentures. Non-convertible money balances are
debentures normally earn a higher interest rate than convertible (i) Transaction demand signifying that people demand money to
debentures do. purchase goods and services
(ii) asset demand relating to the desire to hold a very liquid risk free
DEFICIT FINANCING: asset. In other approaches money holding is said to be resting on the
It is a planned excess of expenditure over income. Most governments basic variables of income and rate of return.
now often spend more than they raise in taxation, the difference
being financed by borrowing. The term is normally used in economics DEMONETISATION:
to refer to a planned budget deficit incurred in the interests of Refers to the policy of removal of certain currency from circulation or
expanding aggregate demand by relaxing fiscal policy and thus the discontinuance of the monetary unit of a nation the value of which
injecting purchasing power into the economy. was previously defined in terms of precious metal. The standard
money made of that metal is then said to be demonetised but it may
DEFLATION:

47
continue to circulate as Fiduciary Money. This measure is resorted to
check black market operation and tax evasion. Derivative Call (Put) Warrants:
Warrants issued by a third party which grant the holder the right to
Demand Deposits: buy (sell) the shares of a listed company at a specified price. Derivative
Deposits which are withdrawn on demand by customers. Instrument: Financial instrument whose value depends on the value of
E.g. savings bank and current account deposits. another asset.

DEMAT ACCOUNT: DEVALUATION:

Demat Account concept has revolutionized the capital market of India.
When a depository company takes paper shares from an investor and
converts them in electronic form through the concerned company, it
is called Dematerialization of Shares. These converted Share
Certificates in Electronic form are kept in a Demat Account by the
Depository Company, like a bank keeps money in a deposit account.
Investor can withdraw the shares or purchase more shares through
this demat Account.
DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION
(DICGC):
This Corporation was established in January 1962, under the Deposit
Insurance Corporation Act, 1961 for the purpose of providing
insurance cover to the bank depositors, particularly small depositors
against the risk of loss arising out of bank failures. All commercial
banks including Local Area banks Regional Rural banks are to be
registered under the Scheme. All specified cooperative banks like
State cooperative banks and Central cooperative banks come under its
ambit. As for the Credit Guarantee Scheme it is optional for the credit
institutions. The Credit Guarantee Scheme is intended to provide
necessary incentive to banks and financial institutions for giving credit
to small borrowers, (including small farmers) to priority sector, to
small-scale industries, etc; there is legislative proposal to do away with
credit guarantee function of the corporation and to introduce an
alternative scheme.
With reference to a monetary unit, it implies a reduction in its metallic
content as prescribed by law or the lowering of the exchange rate of
one nation's currency in terms of the currencies of other nations.
Devaluation is introduced for improving relative competitiveness in
the international trade. It is resorted to as a corrective action towards
solving balance of payment difficulties.
DEVELOPED COUNTRIES:
Developed countries are those who have achieved (currently or
historically) a high degree of industrialisation, and which enjoy the
higher standards of living. The level of income in these countries are
sufficient to generate the required saving for future investments. As
per the World Bank's classification these are the countries (high-
income) with per capita Gross National Income $3466 and more in
2005.
DEVELOPING COUNTRIES:
It is a group of countries that have not yet reached the stage of
economic development characterised by the growth of
industrialization, nor a level of a national income sufficient to yield the
domestic savings required to finance the investment necessary for
further growth. There are currently about 125 developing countries
with populations over 1 million. As per the World Bank's classification
these are the countries (middle-income) with per capita Gross
National Income between $876 and $3465 in 2005.

DEPRECIATION: DISCOUNT BOND:

In accounting, this term means calculation, by any one of the A bond selling below par, as interest in-lieu to the bondholders.
standardised methods of the decline in the value of an asset.
DISHONOUR OF CHEQUE:
DEPRESSION: Non-payment of a cheque by the paying banker with Comment a
Denotes an economic condition characterised by lengthy period of low return memo giving reasons for the non-payment.
business activity when prices remain low, gross domestic product falls,
purchasing power is sharply reduced and unemployment is high. DEFAULT RISK:
The possibility that a bond issuer will default ie, fail to repay principal
DERIVATIVES: and interest in a timely manner.
Financial derivatives are basically contingent contracts whose values
are derived from some underlying financial instruments like currency, DIVERSIFICATION:
bonds, stock indices, and commodities etc, whose future price The inclusion of a number of different investment vehicles in a
movements are uncertain. Derivatives shift the risk from the buyer of portfolio in order to increase returns or be exposed to less risk.
the derivative product to the seller and hence are effective risk
management tools. Derivatives are used to protect assets from DURATION:
erosion in value due to market volatility enhancing income by making A measure of bond price volatility, it captures both price and
a two-way price movement or making quick money by taking reinvestment risks to indicate how a bond will react to different
advantage of the volatile price movement. The popular derivative interest rate environments.
products are forward rate agreement, interest rate futures, interest
rate swaps, option contracts etc.
E
EASY MONEY POLICY: The ratio of earnings to price (E/P). The reciprocal is price earnings
As contrasted to tight money policy this refers a policy of the central ratio (P/E).
bank of expanding money supply to reduce interest rates. One
purpose of such a policy is to facilitate increase in investment thereby E-BANKING :
raising gross domestic product. E-Banking or electronic banking is a form of banking where funds are
transferred through exchange of electronic signals between banks and
EARNINGS: financial institution and customers ATMs, Credit Cards, Debit Cards,
The total profits of a company after taxation and interest. International Cards, Internet Banking and new fund transfer devices
like SWIFT, RTGS belong to this category.
EARNINGS PER SHARE (EPS):
The amount of annual earnings available to common stockholders as ECONOMIC CAPITAL:
stated on a per share basis. As distinguished from Regulatory capital, the Economic Capital is
EARNINGS YIELD: defined by the Global Association of Risk Professionals (GARP) as the

48
capital cushion required against the underlying credit, market and ESCROW ACCOUNT:
operational risk exposure of a banking organization. It is called Escrow account is an account where the moneys parked will be
'economic" capital because it measures risk in terms of economic released only on fulfilment of some conditions of contract like export
realities rather than potentially misleading regulatory or accounting taking place or like power fed into the national power grid etc. (in the
rules. case of government getting power from independent power
producers). The beneficiary of the account can get the money after
ECONOMIC SYSTEM: fulfilling the prescribed conditions. It is an account placed in trust with
The term refers to the nature of economic life as a whole, with a third party, by a borrower for a specific purpose and to be delivered
particular reference to the ownership and use of property and extent to the borrower only up on the fulfilment of certain conditions.
of Government regulation and controls.
EX-DIVIDEND (XD):
EFT - (Electronic Fund Transfer): A security which no longer carries the right to the most recently
EFT is a device to facilitate automatic transmission and processing of declared dividend or the period of time between the announcement
messages as well as funds from one bank branch to another bank of the dividend and the payment (usually two days before the record
branch and even from one branch of a bank to a branch of another date). For transactions during the ex-dividend period, the seller will
bank. EFT allows transfer of funds electronically with debit and credit receive the dividend, not the buyer. Ex-dividend status is usually
to relative accounts. indicated in newspapers with an (x) next to the stock’s or unit trust’s
name.
EITHER OR SURVIVOR:
Refers to operation of the account opened in two names with a bank. EXECUTION OF DOCUMENTS:
It means that any one of the account holders have powers to Execution of documents is done by putting signature of the person, or
withdraw money from the account, issue cheques, give stop payment affixing his thumb impression or putting signature with stamp or
instructions etc. In the event of death of one of the account holder, affixing common seal of the company on the documents with or
the surviving account holder gets all the powers of operation. without signatures of directors as per articles of association of the
company.
ELECTRONIC COMMERCE (E-COMMERCE):
E-Commerce is the paperless commerce where the exchange of EXCHANGE CONTROL: Refers to official restrictions, which limit the
business takes place by Electronic means. freedom of residents to buy and sell foreign exchange. The primary
aim of exchange control is the conservation of scarce foreign exchange
EMERGING MARKET ECONOMIES: resources. Controls are also used generally to support exchange rate
These are countries that are starting to participate globally by policy. Exchange control helps a country to avoid destabilising capital
implementing reform programmes and undergoing economic flows or sharp movements in reserves.
improvement. A term coined in 1981 by Antoine W Van Agtmael of
the International Finance Corporation, an emerging market economy EXCHANGE RATE:
is defined as an economy with low- to- middle per capita income. Such This expresses the price of one unit of foreign currency in relation to
countries constitute approximately 80% of the global population, the domestic currency in a foreign exchange market. The foreign
representing about 20% of the world's economies. To begin with the exchange market is a market where currencies of different countries
term "emerging market" was used to describe a fairly narrow list of are traded. Under the fixed exchange rate regime where there are
middle-tohigher income economies among the developing countries, fixed par values, exchange rates are reasonably stable. Central Bank
with stock markets in which foreigners could buy securities. The intervention in the forex market is frequent and most of the foreign
term's meaning has since been expanded to include more or less all exchange transactions are in the spot or cash market. Under the
developing countries. EMEs are characterised as transitional, meaning floating exchange rate system, exchange rates are not determined by
they are in the process of moving from a closed to an open market Government or Central Bank but by the market forces of supply and
economy while building accountability within the system. Examples demand. The exchange rates float or freely move up and down. As
include the former Soviet Union and Eastern Bloc countries. there would be large fluctuation in the rates, exposure to risk
increases and large proportion of transactions takes place in forward
ENDORSEMENT: market. Central Bank intervention in the market becomes less
When a Negotiable Instrument contains, on the back of the frequent. When the exchange rate is adjusted downwards, prices of
instrument an endorsement, signed by the holder or payee of an exports of goods and services fall in foreign currency terms and causes
order instrument, transferring the title to the other person, it is called increase in foreign demand. Imports become costlier in terms of
endorsement. domestic currency and tend to reduce domestic demand.

BOUNCING OF A CHEQUE: EXCHANGE RATE FORECASTING:

Where the name of the endorsee or transferee is not mentioned on Exchange rate is the price of one currency in terms of another
the instrument. currency. Outside fixed exchange rate system, the rate, like any other
market price is determined by the forces of demand and supply. These
forces are governed by certain economic variables like trade balances,
ENDORSEMENT IN FULL: inflation, interest rate etc. Fundamental approach to forecasting
Where the name of the endorsee or transferee appears on the exchange rate depends on forecasts of these key variables. As a rule of
instrument while making endorsement. thumb method, exchange rate will tend to rise (fall) if
(i) The current account is in surplus (deficit)
EQUITY: (ii) Inflation relative to other countries is low (high)
Ownership of the company in the form of shares of common stock. (iii) Interest rate relative to other countries rise (fall).
The capital flows and interplay between market expectations and
EQUITY CALL WARRANTS: government policy often render the fundamental approach
Warrants issued by a company which give the holder the right to inadequate.
acquire new shares in that company at a specified price and for a
specified period of time. EXCHANGE RATE MANAGEMENT:

49
One of the responsibilities of the RBI is to ensure the stability of the EXPOSURE NORMS:
exchange rate of rupee. The RBI Act 1934 empowers the RBI to buy Refers to the prescription of limits on exposure with Comment respect
from and sell to any authorised person foreign exchange at such rate to credit (funded or non-funded) and investment to
of exchange and on such terms and conditions that the government (i) individual/group borrowers in India,
may decide. Presently the RBI announces a reference rate based on (ii) Specific industry or sectors and towards unsecured guarantees and
the quotation of a few selected banks in Mumbai at 12 noon every day unsecured advances.
and buys and sells only U.S. Dollar. The exchange rate is determined Exposure limits are also prescribed with regard to advances against
by the supply and demand of the currency. When the demand for shares/debentures. This is intended to attain better risk management
currency exceeds supply, the currency becomes dear and vice versa. In and avoidances of concentration of credit risks.
order to bring orderly conditions in the market and protect the
domestic currency's value, Central Bank intervenes in the market by EXTERNAL DEBT:
selling or buying the foreign currency in the market. The objective of Refers to outstanding contractual liabilities of residents of a country to
the exchange rate management is to ensure that the external value of non-residents in gross terms, involving payment of interest with or
the rupee is realistic and credible so as to have sustainable balance of without principal or payment of interest principal with or without
payments position and healthy foreign exchange situation. interest. The debt liabilities consist of long term and short term
liabilities.
F
Face Value/ Nominal Value: system effectively performs its key economic functions such as
The value of a financial instrument as stated on the instrument. allocating resources and spreading risks as well as settling payments.
Interest is calculated on face/nominal value. Financial stability thwarts financial crises.

FCCB: FINANCIAL SYSTEM:

A Foreign Currency Convertible Bond (FCCB) is a type of convertible This consists of financial institutions, financial instruments and
bond issued in a currency different than the issuer’s domestic financial markets, providing an effective payments and credit system
currency. In other words, the money being raised by the issuing and channelling of funds from the savers to the investing sectors in
company is in the form of a foreign currency. A company may issue an the economy. Financial institutions or financial intermediaries
FCCB if it intends to make a large investment in a country using that mobilise savings of the community and ensure efficient allocation of
foreign currency. these savings to high yielding investment projects so that they can
offer attractive and assured returns to savers and this process give rise
FIAT MONEY: to money and other various financial assets. Standing at the centre of
Refers to money, like the currency of the present day, without intrinsic the financial system, the Reserve Bank's aim is to maintain financial
value but decreed (by fiat) to be legal tender by the Government. Fiat stability in the country as an essential ingredient for healthy, safe and
money is accepted only as long as people have confidence that it will successful economy.
be accepted as medium of exchange.
FISCAL POLICY:
FINANCIAL INCLUSION: Refers to Government's policy towards taxation, public debt, public
Refers to the delivery of banking service at an affordable cost to the expenditure, appropriation and similar matters having an effect on the
vast sections of disadvantaged and low income groups of the private business and economy of the nation as a whole. Taxation and
population. The purpose of financial inclusion is to provide access to public expenditure policies which are at the centre of fiscal policy, are
banking, access to affordable credit and access to free information on adopted to help dampen the business cycle swings and contribute to
money matters. This concept has become a part of public policy so as the maintenance of growing economy with high employment and
to make available banking and payment services to the entire price stability. Fiscal policy is often used to correct the nation's saving
population without discrimination. The primary aim is to avoid the investment imbalance and recessionary trends that cannot be
pitfalls of financial exclusion in the form of social tension arising from managed by monetary policy. Fiscal policy directly affects the financial
lack of empowerment of the low- income strata of the population. resources and purchasing power in the hands of the public and hence
is an important determinant of aggregate demand.
FINANCIAL MARKETS:
Financial markets comprise of financial assets or instruments and FISCAL DEFICIT:
financial institutions involved in movements of funds. The important The difference between revenue receipts plus non debt capital
segments of financial markets are receipts on one side and total expenditure including loans, net of
(i) Organised credit market dominated by commercial banks, repayment, on the other side. In other words, this is the budget deficit
(ii) The money market with call/notice money segments forming a plus borrowings and other liabilities. Fixed-income Securities:
significant portion, Investment vehicles that offer a fixed periodic return.
(iii) Capital market consisting of primary and secondary equity markets
and term lending institutions, FIXED RATE BONDS:
(iv) Debt market dealing in public sector bonds and corporate Bonds bearing fixed interest payments until maturity date.
debentures,
(v) gilt edged market dealing in government securities, FLOATING RATE BONDS:
(vi) Housing finance market, Bonds bearing interest payments that are tied to current interest
(vii) Hire purchase, leasing finance and other nonbanking financial rates.
companies,
(viii) Insurance market, FACTORING:
(ix) Informal credit market and Business of buying trade debts at a discount and making a profit when
(x) Foreign exchange market. debt is realized and also taking over collection of trade debts at
agreed prices.
FINANCIAL STABILITY:
Financial stability broadly refers to the smooth functioning of the key FOREIGN BANKS:
elements (like financial institutions and markets) that constitute the
financial system. It describes a steady state in which the financial

50
Banks incorporated outside India but operating in India and regulated Accretion to the foreign exchange reserves of the RBI comes from
by the Reserve Bank of India (RBI),. e..g., Barclays Bank, HSBC, purchase of U.S. Dollar from authorised dealers, aid and loan receipts
Citibank, Standard Chartered Bank, etc. on Government of India account, International Monetary Fund
transactions, purchase of foreign currencies from international
FORFEITING: institutions and foreign central banks, earnings in the form of interest
In International Trade when an exporter finds it difficult to realize and discount. The outgo will be mainly on account sale of US.Dollar to
money from the importer, he sells the right to receive money at a authorised dealers on account of Bank's intervention in the market
discount to a forfeiter, who undertakes inherent political and and International Monetary Fund transactions. The bank's foreign
commercial risks to finance the exporter, of course with assumption of reserves are held mainly in balances with foreign central banks,
a profit in the venture. overnight investments, investment in treasury bills, fixed deposits with
Bank for International Settlements and major foreign commercial
FORGERY: banks, Certificates of Deposits issued by the banks and investments in
when a material alteration is made on a document or a Negotiable long term securities of foreign governments, IBRD and Asian
Instrument like a cheque, to change the mandate of the drawer, with Development Bank.
intention to defraud. Dollar Main inflow: (Supply) Dollar main outflow: (Demand)
 Through export  Paid for import
FOREIGN EXCHANGE ASSETS OF BANKING SECTOR:  Through FII investment  Withdrawal of funds FII
Refers to net foreign exchanges of RBI comprising gold coin and in share and Debt  Capital loan repayment
bullion, foreign securities and balances held abroad offset by A/C NO:1 market
of International Monetary Fund with RBI. Foreign currency assets of  Repatriation fund sent
other banks include balances held abroad in Nostro account etc and back to India by NRI
investments in eligible foreign securities and bonds less overseas
borrowings of banks and non-resident repatriable foreign currency FORWARD EXCHANGE RATE: A forward exchange rate is a rate of
fixed deposits with banks exchange which is fixed immediately, by means of a forward exchange
contract, but the exchange transaction to which it is applicable would
FOREIGN EXCHANGE MANAGEMENT ACT (FEMA): take place at some future date as agreed upon. A forward exchange
Replacing the Foreign Exchange Regulation Act (FERA) the Foreign contract is a firm and binding bargain between a bank and its
Exchange Management Act was enacted in 1999, the provisions of customer, or between two banks, under which one party undertakes
which are aimed at consolidating and amending the law relating to to deliver and the other to receive a fixed sum in foreign currency
foreign exchange transactions with a view to facilitate external trade against payment in Indian rupees, on a fixed future date, or between
and payments and development of foreign exchange market. This two fixed dates, at a pre determined rate fixed at time the contract is
change was brought out in the context of certain developments in the made. Forward exchange operations enable the creditor who has to
external sector like sizable increase in the foreign exchange reserve, receive payment of his debt, in terms of a foreign currency, at a future
growth in foreign trade, rationalisation of tariffs, current account date, to know exactly the value of money he has to receive in terms of
convertibility, liberalisation of Indian investment abroad, increased his own currency. Similarly, it enables a debtor who has to pay certain
access to external borrowings and investment in Indian stock market amount, at some future date, in terms of a foreign currency, to know
by foreign institutional investors. While FERA laid stress on precisely the probable cost t
conservation of foreign exchange and its proper utilisation, FEMA aims
at facilitating external trade and promoting orderly development of FUNDAMENTAL ANALYSIS:
forex market. FERA was a criminal law where as FEMA is a piece of Research to predict stock value that focuses on such determinants as
civil law. earnings and dividends prospects, expectations for future interest
rates and risk evaluation of the firm.
FOREIGN EXCHANGE MARKET:
Under the provisions of RBI Act, the RBI authorises on application, any FUTURE VALUE:
person to deal in foreign exchange or in foreign securities as The amount to which a current deposit will grow over a period of time
authorised dealer. The major participants in the forex market are when it is placed in an account paying compound interest.
banks which have been authorised to deal in foreign exchange.
Industrial Development bank of India, Industrial Finance Corporation FUTURE VALUE OF AN ANNUITY:
of India, Industrial credit and investment Corporation of India have The amount to which a stream of equal cash flows that occur in equal
also been licensed to undertake non-trade transactions incidental to intervals will grow over a period of time when it is placed in an
the main business activities. The RBI also issues licences to certain account paying compound interest.
individuals, established firms and hotels to deal in foreign currency
and they are known as money changers. FUTURES CONTRACT:
A commitment to deliver a certain amount of some specified item at
FOREIGN EXCHANGE RESERVES OF RBI: some specified date in the future.
G
GARNISHEE ORDER: extends a GLC to NABARD under section 17(4E) of the RBI Act to
When a Court directs a bank to attach the funds to the credit of enable it to meet the credit requirement of co-operatives and RRBs.
customer's account under provisions of Section 60 of the Code of Civil
Procedure, 1908. GIFFEN GOODS:
They are goods which do not obey the laws of demand.
GENERAL LIEN:
A right of the creditors to retain possession of all goods given in GILTS:
security to him by the debtor for any outstanding debt. Term denotes Government securities like Central Government loans
and State Government loans. Include government guaranteed bonds
GENERAL LINE OF CREDIT (GLC): like that of IDBI. 'Gilts' is the short form for gilt-edged securities- so
A General Line of Credit may be defined as an arrangement in which a called because they carry no risk.
bank or a vendor extends a specified amount of unsecured credit to a
specified borrower for a specified time period. For example, RBI GLOBALISATION:

51
This term connotes a process by which the national economy moves 6. Net primary deficit: (non-interest revenue expenditure +capital
towards a single borderless world economy with open market. It expenditure)-(non-interest revenue receipts +grants).
implies expansion of markets for goods, services, labour and capital Primary deficit concept indicates the extent to which current fiscal
beyond national boundaries. Independence of countries, competition, actions affects the debt position of Union Government. G
and dominance of market and private sector characterise the
globalisation process. OVERNMENT'S CURRENCY LIABILITIES TO PUBLIC:
Denotes circulation of rupee coins and small coins.
GOODS AND SERVICES TAX:
Goods and Service tax is a tax on goods and services, which is leviable GROSS DOMESTIC PRODUCT (GDP):
at each point of sale or provision of service, in which at the time of Gross Domestic Product is a measure of the total value of final goods
sale of goods or providing the services the seller or services provider and services produced within a country during a given year. Gross
can claim the input credit of tax which he ahs paid while purchasing domestic product can be measured in two different ways
the goods or procuring the service. GST is an indirect tax and ultimate (1) as the flow of final product and
burden of the GST has to be taken by the last customer. It will be (2) as the total cost or earnings of inputs producing output.
applicable from April 01, 2012. Each year public consumes a wide variety of final goods and services.
Summation of the value spent on these final goods and services will
GOVERNMENT BUDGET-DEFICIT: give the GDP in an over simplified example of calculation.
Budget deficit broadly represents excess of total expenditures over Comprehensive definition of GDP would include all final goods and
total receipts with borrowings not included among receipts. The services, like consumption expenditure, private investment,
various measures of budget deficit are as follows. government spending on goods and services and net exports to the
1. Traditional budget deficit: Revenue expenditure +capital rest of the world. In other words GDP is defined as the total money
expenditure +net domestic lending - revenue receipts + foreign value of the final products produced by the nation. Intermediate
borrowings + domestic borrowings excluding treasury bills. products are excluded. The second way to calculate GDP is to total the
2. Monetary deficit: This is measured by the changes in Reserve Bank annual flow of factor earnings, wages, interest, rent and profits that
credit to government represented by total RBI holdings of government are the costs of producing society's final products. This is called the
securities (dated securities and treasury bills) less central governments cost or earning approach. Gross National Product (GNP) equals the
deposits with the Reserve Bank. GDP plus the income accruing to domestic residents less income
3.Gross Fiscal Deficit: Revenue expenditure +capital expenditure +net earned by the foreigners in the domestic economy.
domestic lending-revenue receipts +grants (deficit is covered through
all borrowings). Guarantee:
4. Net fiscal deficit: Gross fiscal deficit -Net domestic lending. A contract between guarantor and beneficiary to ensure performance
5. Primary deficit: gross fiscal deficit -net interest payments, i.e. of a promise or discharge the liability of a third person. If promise is
interest payments -interest earnings broken or not performed, the guarantor pays contracted amount to
the beneficiary.
H
HEDGE: bank, he becomes holder of that cheque. Even if he loses the cheque,
A combination of two or more securities into a single investment he continues to be holder. Finder cannot become the holder.
position for the purpose of reducing or eliminating risk.
HOLDER IN DUE COURSE :
HEDGE FUND: A person who receives a Negotiable Instrument for value, before it
‘Hedge’ means to reduce financial risk. A hedge fund is an investment was due and in good faith, without notice of any defect in it, he is
fund open to a limited range of investors and requires a very large called holder in due course as per Negotiable Instrument Act. In the
initial minimum investment. It is important to note that hedging is earlier example if my friend lends some money to me on the basis of
actually the practice of attempting to reduce risk, but the goal of most the cheque, which I have given to him for encashment, he becomes
hedge funds is to maximize return on investment. holder-indue course.

HOLDER: Hypothecation:
Holder means any person entitled in his own name to the possession Charge against property for an amount of debt where neither
of the cheque, bill of exchange or promissory note and who is entitled ownership nor possession is passed to the creditor. In pledge,
to receive or recover the amount due on it from the parties. For possession of property is passed on to the lender but in
example, if I give a cheque to my friend to withdraw money from my hypothecation, the property remains with the borrower in trust for
the lender.
I
IDENTIFICATION: (3) independent monetary policy.
When a person provides a document to a bank or is being identified by Due to conflicting objectives, an economy cannot achieve monetary
a person, who is known to the bank, it is called identification. Banks independence, exchange rate stability and full financial integration by
ask for identification before paying an order cheque or a demand draft allowing free capital flows. Free capital flows will affect exchange
across the counter. rates; monetary independence also would affect exchange rates
(increase or decrease in domestic money supply will affect exchange
IMPORT COVER: rates). Likewise, if a country tries to maintain fixed exchange rate, it
Level of a country's international reserves in relation to its average has to absorb all the inflows of foreign capital, which in turn will affect
monthly import bill. Three months import cover is regarded as an the money supply. This will affect the monetary independence
adequate insurance against severe payment difficulties. because of disturbance to the monetary policy stance.
IMPOSSIBLE TRINITY:
It stands for theoretical impossibility of having a macroeconomic INDEMNIFIER:
situation in a country in which all the following three aspects together When a person indemnifies or guarantees to make good any loss
can coexist, namely caused to the lender from his actions or others' actions.
(1) pegged exchange rate
(2) free capital flows and INDEMNITY:

52
Indemnity is a bond where the indemnifier undertakes to reimburse Inflation Targeting is a monetary policy framework with public
the beneficiary from any loss arising due to his actions or third party announcement of official quantitative target or target ranges for the
actions. inflation rate and explicit acknowledgement that low or stable
inflation constitute the long run goal of monetary policy.
INCOME:
The amount of money an individual receives in a particular time INFRASTRUCTURE DEVELOPMENT FINANCE COMPANY (IDFC):
period. For the purpose of fostering the growth of private capital flow for
infrastructure facilities like power, roads, railways, highways,
INDEX FUND: waterways, irrigation etc, on a commercially viable basis, the IDFC was
A mutual fund that holds shares in proportion to their representation established in Chennai as a Limited company in January 1997. It acts
in a market index, such as the S&P 500. as a direct lender and a refinancing agency. The Government of India
INDIAN FINANCIAL NET WORK (INFINET): This was set up by the and Reserve Bank hold 40 percent stake in the company. Other
Reserve Bank in 1999 through the Institute for Development and institutions who have participated in the share capital are Industrial
Research in Banking and Technology (IDRBT). The purpose is to Credit and Investment Corporation of India, Unit trust of India and
establish an efficient, safe and dependable communications backbone Housing Development Finance Corporation Ltd. The company also
to cater to the networking requirements of public sector banks and promotes debt securitisation and offers credit guarantees.
financial institutions. All fund based operations such as electronic fund
transfers, centralised fund management scheme, anywhere banking, INITIAL PUBLIC OFFERING (IPO):
government securities trading, ATM/Credit transactions, currency An event where a company sells its shares to the public for the first
chest accounting are done through this. time. The company can be referred to as an IPO for a period of time
after the event. Inside Information: Non-public knowledge about a
INDIRECT QUOTATION: Foreign exchange rate which values the company possessed by its officers, major owners, or other individuals
domestic currency in terms of the foreign currency. For example, in with privileged access to information.
London the value of one pound expressed in terms of other currency.
INSIDER TRADING:
INFLATION: The illegal use of non-public information about a company to make
Inflationary price movement means a rise in the comprehensive price profitable securities transactions Insolvent: Insolvent is a person who
index, say, index of wholesale prices. The implication of inflation is is unable to pay his debts as they mature, as his liabilities are more
that the value of money tends to grow unstable. The inflationary than the assets. Civil Courts declare such persons insolvent. Banks do
situation is generally featured by not open accounts of insolvent persons as they cannot enter into
(a) rise in prices and cost of living contract as per law. Interest Warrant: When cheque is given by a
(b) excess of money supply company or an organization in payment of interest on deposit, it is
(c) prevalence of restraints on consumption and called interest warrant. Interest warrant has all the characteristics of a
(d) administrative controls. cheque. International Banking: involves more than two nations or
The classical type of inflation occurs when the money supply increases countries. If an Indian Bank has branches in different countries like
faster than the output of goods or services. Yet another type of State Bank of India, it is said to do International Banking.
inflation emerges out of the operation of factors of cost evidenced by
a more or less constant rise in cost of production which is passed on to INTRODUCTION:
consumers. Banks are careful in opening any account for a customer as the
prospective customer has to be introduced by an existing account
INFLATION MEASUREMENT: holder or a staff member or by any other person known to the bank
Inflation rate forms part of important macro economic indicators used for opening of account. If bank does not take introduction, it will
by policy makers particularly central bankers in policy formulation. amount to negligence and will not get protection under law.
Inflation could be measured through three sets of price indices
namely, the Whole price indices (WPI), implicit National Income INTRINSIC VALUE:
Deflator and Consumer Price Indices (CPI). The WPI is compiled for all The difference of the exercise price over the market price of the
commodities as well as major groups and individual commodities and underlying asset. Investment: A vehicle for funds expected to increase
is published on a weekly basis since 1942. Weights are assigned to the its value and/or generate positive returns.
commodities/sub-groups/major groups on the basis of the value of
the whole sale market transactions at the time of adoption of the base INVESTMENT ADVISER:
year. The commodities are classified under 3 major groups, A person who carries on a business which provides investment advice
(1) primary articles, with respect to securities and is registered with the relevant regulator
(2) fuel, power, light and lubricants and as an investment adviser.
(3) manufactured products.
This index because of the good frequency of availability helps IPO PRICE:
continuous monitoring. The National Income Deflator, a The price of share set before being traded on the stock exchange.
comprehensive index is derived as a ratio of GDP at current prices to Once the company has gone Initial Public Offering, the stock price is
GDP in real terms. It encompasses all the economic activities including determined by supply and demand.
services. The CPI reflects the retail prices of selected goods in the INTERNAL CAPITAL ADEQUACY ASSESSMENT PROCESS (ICAAP):
commodity market of homogeneous group of consumers. Consumer This is intended to ensure that the capital held by the Bank is
price indices are separately computed for commensurate with Comment the Bank's overall risk profile. The
(1) industrial workers ICAAP takes into account effectiveness of Bank's risk management
(2) urban non-manual employees and system in identifying, assessing, measuring, monitoring and managing
(3) agricultural labourers. The major groups covered are food, pan various risks. ICAAP comprises all of the Bank's procedures and
supary, tobacco, intoxicants, fuel, housing, clothing, bedding, and measures designed to ensure: a. appropriate definition and
footwear and miscellaneous items. measurement of risks and b. appropriate level of internal capital in
relation to Bank's risk profile.
INFLATION TARGETING:
INTEREST RATE:

53
Interest rate is the price of borrowing or "renting" money as an asset
with its purchasing power services. As the "renting" of money creates ISSUE DEPARTMENT:
credit, interest is the price of credit. The price of money is the cost of Issue Department of the Reserve Bank of India is entrusted with the
commodity or service bought with money. responsibility of obtaining currency notes and coins from the currency
printing presses and mints and distributing them to the treasuries,
INTERVENTION: sub-treasuries and the bank's agencies and sub-agencies, maintaining
Broad definition of intervention is any sale or purchase of foreign currency chests and small coin depots, removing from chests old and
exchange against domestic currency in the exchange market by the unserviceable notes for destruction in due course after examination.
Central Bank. Defined narrowly, Central Bank transactions in the Issue Department is comprised of two sections, the General resource
foreign exchange market should be called "intervention" only if section which arranges for supply of notes and coins from the presses
(i) they are sterilized, i.e. are offset by Central bank transactions that and Government Mint and their withdrawal from circulation,
nullify any impact on domestic money creation (unsterilised settlement of claims on defective notes, preparation of currency
intervention would then be considered monetary policy); circulation account. The cash section handles the cash transaction and
(ii) the purpose is to influence the exchange rate. Essentially, the actual receipt and remittances of cash.
intervention consciously seeks to stem the adverse current market
trend.
J
JHF Account: When two or more individuals jointly open an account with a bank.
Joint Hindu Family Account is account of a firm whose business is
carried out by Karta of the Joint family, acting for all the family Junk Bond:
members. The family members have common ancestor and generally High-risk securities that have received low ratings (i.e. Standard &
maintain a common residence and are subject to common social, Poor’s BBB rating or below; or Moody’s BBB rating or below) and as
economic and religious regulations. such, produce high yields, so long as they do not go into default.
Joint Account:
K
KARTA:
Manager of a Hindu Undivided Family (HUF) who handles the family KYC Norms:
business. He is usually the eldest male member of the undivided Know your customer norms are imposed by R.B.I. on banks and other
family. financial institutions to ensure that they know their customers and to
ensure that customers deal only in legitimate banking operations and
KIOSK BANKING: not in money laundering or frauds.
Doing banking from a cubicle from which food, newspapers, tickets
etc. are also sold.
L
LAW OF LIMITATION:
Limitation Act of 1963 fixes the limitation period of debts and LIBOR:
obligations including banks loans and advances. If the period fixed for The London Interbank Offered Rate (or LIBOR) is a daily reference rate
particular debt or loan expires, one cannot file a suit for is recovery, based on the interest rates at which banks offer to lend unsecured
but the fact of the debt or loan is not denied. It is said that law of funds to other banks in the London wholesale money market (or
limitation bars the remedy but does not extinguish the right. interbank market). The LIBOR rate is published daily by the British
Banker’s Association and will be slightly higher than the London
LEASE FINANCING: Interbank Bid Rate (LIBID), the rate at which banks are prepared to
Financing for the business of renting houses or lands for a specified accept deposits.
period of time and also hiring out of an asset for the duration of its
economic life. Leasing of a car or heavy machinery for a specific period LIMIT ORDER:
at specific price is an example. An order to buy (sell) securities which specifies the highest (lowest)
price at which the order is to be transacted. Limited Company: The
LETTER OF CREDIT: passive investors in a partnership, who supply most of the capital and
A document issued by importers bank to its branch or agent abroad have liability limited to the amount of their capital contributions.
authorizing the payment of a specified sum to a person named in
Letter of Credit (usually exporter from abroad). Letters of Credit are LIQUIDITY:
covered by rules framed under Uniform Customs and Practices of The ability to convert an investment into cash quickly and with little or
Documentary Credits framed by International Chamber of Commerce no loss in value.
in Paris.
LISTING:
LIMITED COMPANIES ACCOUNTS: Quotation of the Initial Public Offering Company’s shares on the stock
Accounts of companies incorporated under the Companies Act, 1956 . exchange for public trading.
A company may be private or public. Liability of the shareholders of a
company is generally limited to the face value of shares held by them. LISTING DATE:
The date on which Initial Public Offering stocks are first traded on the
LEVERAGE RATIO: stock exchange by the public.
Financial ratios that measure the amount of debt being used to
support operations and the ability of the firm to service its debt.
M
MARGIN CALL: The product of the number of the company’s outstanding ordinary
A notice to a client that it must provide money to satisfy a minimum shares and the market price of each share.
margin requirement set by an Exchange or by a bank / broking firm.
MARKET MAKER:
MARKET CAPITALIZATION:

54
A dealer who maintains an inventory in one or more stocks and MINOR ACCOUNTS:
undertakes to make continuous two-sided quotes. A minor is a person who has not attained legal age of 18 years. As per
Contract Act a minor cannot enter into a contract but as per
MARKET ORDER: Negotiable Instrument Act, a minor can draw, negotiate, endorse,
An order to buy or an order to sell securities which is to be executed receive payment on a Negotiable Instrument so as to bind all the
at the prevailing market price. persons, except himself. In order to boost their deposits many banks
open minor accounts with some restrictions.
MONEY MARKET:
Market in which short-term securities are bought and sold. MOBILE BANKING :
With the help of M-Banking or mobile banking customer can check his
MARGINAL STANDING FACILITY RATE: bank balance, order a demand draft, stop payment of a cheque,
MSF scheme has become effective from 09th May, 2011 launched by request for a cheque book and have information about latest interest
the RBI. Under this scheme, Banks will be able to borrow upto 1% of rates.
their respective Net Demand and Time Liabilities. The rate of interest
on the amount accessed from this facility will be 100 basis points (i.e. MONEY LAUNDERING:
1%) above the repo rate. This scheme is likely to reduce volatility in When a customer uses banking channels to cover up his suspicious
the overnight rates and improve monetary transmission. and unlawful financial activities, it is called money laundering.

MANDATE: MONEY MARKET:

Written authority issued by a customer to another person to act on his Money market is not an organized market like Bombay Stock Exchange
behalf, to sign cheques or to operate a bank account. but is an informal network of banks, financial institutions who deal in
money market instruments of short term like CP, CD and Treasury bills
MATERIAL ALTERATION: of Government.
Alteration in an instrument so as to alter the character of an
instrument for example when date, amount, name of the payee are MORATORIUM:
altered or making a cheque payable to bearer from an order one or R.B.I. imposes moratorium on operations of a bank; if the affairs of the
opening the crossing on a cheque. bank are not conducted as per banking norms. After moratorium R.B.I.
and Government explore the options of safeguarding the interests of
MERCHANT BANKING : depositors by way of change in management, amalgamation or take
When a bank provides to a customer various types of financial services over or by other means.
like accepting bills arising out of trade, arranging and providing
underwriting, new issues, providing advice, information or assistance MORTGAGE:
on starting new business, acquisitions, mergers and foreign exchange. Transfer of an interest in specific immovable property for the purpose
of offering a security for taking a loan or advance from another. It may
MICRO FINANCE: be existing or future debt or performance of an agreement which may
Micro Finance aims at alleviation of poverty and empowerment of create monetary obligation for the transferor (mortgagor).
weaker sections in India. In micro finance, very small amounts are
given as credit to poor in rural, semi-urban and urban areas to enable MUTUAL FUND:
them to raise their income levels and improve living standards. A company that invests in and professionally manages a diversified
portfolio of securities and sells shares of the portfolio to investors.
N
NABARD: January 1992, which encompassed modifying the policy framework,
National Bank for Agriculture & Rural Development was setup in 1982 improving the financial soundness of banks, strengthening
under the Act of 1981. NABARD finances and regulates rural financing institutional framework and strengthening of supervisory mechanism.
and also is responsible for development agriculture and rural A second high-level committee on banking sector reforms under the
industries. chairmanship of M. Narasimham was appointed by the Government in
1997, to review the record of implementation of financial sector
NATIONAL PRODUCT or NATIONAL INCOME: reforms recommended by the first committee and to chart the
This is an indicator of economic perfomance of a country in any given reforms necessary in the years ahead. The Committee in its report
period and is the measure of product generated in a country and submitted in April 1998 gave wide ranging recommendations to
income accrued from abroad. strengthen the banking system and revamp the regulatory and
(National income = Net national product at factor cost = Sum of all the supervisory functions.
factor payments (wages, salaries, rent, interest, and profit) = The value
of all final goods and services, sold/ produced in the economy as NEGOTIATION:
whole. In the context of banking, negotiation means an act of transferring or
Gross national product - depreciation or capital consumption = Net assigning a money instrument from one person to another person in
national product at factor cost. Net national product at factor cost + the course of business.
indirect taxes subsidies = Net national product at market prices.
NET ASSET VALUE:
NARASIMHAM COMMITTEE: The underlying value of a share of stock in a particular mutual fund;
A Committee on Financial System under the chairmanship of M. also used with preferred stock.
Narasimham was set up by the Government of India to examine all NON-FUND BASED LIMITS:
aspects relating to the structure, organisation, functions and Non-Fund Based Limits are those type of limits where banker does not
procedures of the financial system and make recommendations with a part with the funds but may have to part with funds in case of default
view to remove the rigidities and weaknesses of the financial system by the borrowers, like guarantees, letter of credit and acceptance
The Committees' recommendations made in November 1991 facility.
constitute a landmark in the Banking policy in the country and ushered
the banking business into a market oriented system. The RBI has been NON-RESIDENT:
implementing the key recommendations of the committee since

55
A person who is not a resident of India is a non-resident. Non-Resident
Accounts: Accounts of non-resident Indian citizens opened and NPA Account:
maintained as per R.B.I. Rules. If interest and instalments and other bank dues are not paid in any
loan account within a specified time limit, it is being treated as
NOTARY PUBLIC: nonperforming assets of a bank.
A Lawyer who is authorized by Government to certify copies of
documents.
O
OPEN MARKET OPERATION: foreign currency funds are external. Deployment of funds restricted to
A monetary policy instrument which is used by the Reserve Bank lending to units located in SEZs and SEZ developers. The branches are
mainly with a view to affect the reserve base of the banks and thereby not allowed to deal in Indian rupee.
the extent of monetary expansion. It also, in the process, helps to
create and maintain a desired pattern of yield on government OFF-SITE MONITORING AND SURVEILLANCE (OSMOS):
securities and to assist the government in raising resources from the This system providing on-going monitoring of performance of banks
capital market. Under the RBI Act, the RBI is authorised to purchase was introduced in 1995 with the aim of assessing the financial position
and sell the securities of the Union Government and State of banks between the periods of on-site inspection. Under this banks
Governments of any maturity and the security specified by the Central are required to submit periodical returns to the RBI incorporating data
Government on the recommendation of Bank's Central Board. on assets, liabilities, interest rate and liquidity risk, off-balance sheet
Presently the RBI deals only in the securities issued by the Union exposure etc. The exercise involves two-tier approaches
Government. Open market operations are by way outright sale and (1) analysis of statistical reports and
purchase of securities through the Securities Department and repo (2) routine discussions with management.
and reverse repo transactions.
OFFER FOR SALE:
OUT SOURCING BY BANKS: An offer to the public by, or on behalf of, the holders of securities
Outsourcing involves using the service of a third party (either affiliated already in issue. Offer for Subscription: The offer of new securities to
or external to the corporate entity) to perform activities on a the public by the issuer or by someone on behalf of the issuer. Online
continuing basis that would normally be undertaken by the bank itself. Banking: Banking through internet site of the bank which is made
Third party or service provider refers to the entity that is undertaking interactive.
the outsourced activity on behalf of the bank . The bank will have to
ensure effective management of certain risks associated with OPEN-END (MUTUAL) FUND:
outsourcing like strategic risk, reputation risk, compliance risk, There is no limit to the number of shares the fund can issue. The fund
operational risk, country risk, contractual risk, access risk, systemic issues new shares of stock and fills the purchase order with those new
risk, etc., so as to avoid damage to bank's business operation, shares. Investors buy their shares from, and sell them back to, the
reputation or profitability. mutual fund itself. The share prices are determined by their net asset
value.
OFF BALANCE SHEET ITEMS:
Those items which affect the financial position of a business concern, OPEN OFFER:
but do not appear in the Balance Sheet E.g. guarantees, letters of An offer to current holders of securities to subscribe for securities
credit. The mention "off Balance Sheet items" is often found in whether or not in proportion to their existing holdings.
Auditors Reports or Directors Reports.
OPTION:
OFF-SHORE BANKING UNITS: A security that gives the holder the right to buy or sell a certain
With a view to providing an internationally competitive and hassle- amount of an underlying financial asset at a specified price for a
free environment for production for exports the Government of India specified period of time.
introduced Special Economic Zones (SEZs). The Government of India
also permitted to set up off-shore banking units in these zones. These OVERSUBSCRIBED:
units are virtually foreign branches of Indian banks but located in When an Initial Public Offering has more applications than actual
India. All banks operating in India authorised to deal in foreign shares available. Investors will often apply for more shares than
exchange are allowed to open off-shore banking units. The Reserve required in anticipation of only receiving a fraction of the requested
bank grants exemption from Cash Reserve Ratio requirement to the number. Investors and underwriters will often look to see if an IPO is
parent bank in respect of these branches. Banks, however, have to oversubscribed as an indication of the public’s perception of the
keep Statutory Liquidity Ratio for the branches. The sources for raising business potential of the IPO Company.
P
PASS BOOK: which enables a bank to sell to a third party (the transferee) a part or
A record of all debit and credit entries in a customer's account. all of an advance made by it to a borrower or client against
Generally all banks issue pass books to Savings Bank/Current Account hypothecation of goods or book-debt. Legally speaking the PC is a
Holders. Par Bond: A bond selling at par (i.e. at its face value). Par deed of transfer. The PC in practice represented a borrower-lender
Value: The face value of a security. relationship between the PC issuer and the banks /institutions
purchasing it. The issuing bank is bound to repay the purchaser bank
PARA BANKING – or participant on maturity irrespective of the position of borrower
the activities which are done by a Bank apart from its normal day to mentioned in the certificate. There are two types of inter-bank
day transactions (like deposit , withdrawal etc..) are called Para- participations: one on risk sharing basis and the other without risk
Banking Activities / Operations. Examples for the Para-Banking sharing. The maximum amount for which inter-bank participation
activities that a Bank normally involves: Global Debit Card, Global would be issued is restricted to 40 percent of outstanding advances.
Credit Card, Bancassurance etc Inter-bank participations with sharing is exempted from Statutory
Liquidity Ratio and Cash Reserve Ratio.
PARTICIPATION CERTIFICATE (PCs):
The PCs were introduced in 1969 with a basic idea that it would even PARTICIPATORY NOTES:
out the liquidity pressure within money market. This is an instrument

56
 These are derivative instruments issued by registered Foreign POWER OF ATTORNEY:
Institutional Investors (FII) to their clients, who are not directly It is a document executed by one person - Donor or Principal, in favour
allowed to buy or sell in Indian markets. Participatory notes are like of another person, Donee or Agent - to act on behalf of the former,
contract notes and are issued by foreign institutional investors to their strictly as per authority given in the document.
overseas clients who may not be eligible to invest in Indian stock
market. Foreign institutional investors invest funds on behalf of such PORTFOLIO:
investors, who prefer to avoid making disclosures required by various A collection of investment vehicles assembled to meet one or more
regulators. These clients could be high net worth non-resident investment goals.
individual or Overseas Corporate Bodies or other unregistered units
(in India). FIIs use their client's money to buy or sell stocks in Indian POVERTY LINE:
market. Returns for clients depend on the gains/loss made by these The poverty line, a measure of poverty is fixed in terms of
registered FIIs from Indian markets. consumption expenditure (per capita monthly consumption
expenditure of Rs 49.1 for rural area and Rs 56.6 for urban area at
PERPETUAL BONDS: 1973-74 prices or Rs 329.1 and Rs 455.2 monthly per capita
Bonds which have no maturity date. expenditure in 1999-2000) at which the norm of adequate nutrition
intake (2250 kilocalories per person per day in urban area and 2400
PERPETUAL DEBT: kilocalories per person in rural areas) is realised.
To enhance the capital raising options of banks, Reserve Bank of India
allows banks to raise Innovative Perpetual Debt Instruments (IPDI), PREFERENCE SHARES:
which will be eligible for inclusion as Tier I capital. Such debt will not Holders of preference shares precede the holders of ordinary shares,
have any maturity date, i.e. will be perpetual like equity shares. Claims but follow debenture holders, in the payment of dividends and in
of investors in Perpetual Debt shall be superior to that of equity share return of capital if the issuing company is liquidated. Preference
investors and subordinated to that of all other investors. Quantum of shares normally entitle the holder only to a fixed rate of dividend, but
Perpetual Debt is restricted to 15% of total Tier I capital. Placing: participating preference shares also entitle the holder to a share of
Obtaining subscriptions for, or the sale of, primary market, where the residual profits. Preference shares carry limited voting rights and they
new securities of issuing companies are initially sold. may be redeemable or not. Cumulative preference shares carry
forward the right to preferential dividends, if unpaid, from one year to
PLANNED AND NON PLANNED EXPENDITURE: the next. From the investor’s point of view, preference shares lie
The world ‘Plan’ here refers to the governments five year economic between debentures and ordinary shares in terms of risk and income,
plans. The Planning Commission is responsible for coming out with while to the issuing company they permit some flexibility in
plans every five years to determine the direction the country should distribution policy at a lower cost than debentures. Preference shares
move it and allocate resource efficiently. The first five year plan was now account for a very small proportion of issues.
launched in 1951; Jawaharlal Nehru was the fist Chairman of the
Planning commission. Currently, the 10th Five Year Plan is on (2002- PREMIUM (WARRANTS):
2007). You can view the earlier Plans on the Planning Commission’s The difference of the market price of a warrant over its intrinsic value.
web site. All Plan and non-plan expenditure fits into the above Premium Bond: Bond selling above par.
categories of revenue and capital expenditure.
PRESENT VALUE:
NON-PLAN EXPENDITURE: The amount to which a future deposit will discount back to present
Defence, interest payments on loans, grants to states. It can be when it is depreciated in an account paying compound interest.
divided into revenue spending and capital spending. Plan expenditure:
Pension, salaries and subsidies, this, too, can be divided into revenue PRESENT VALUE OF AN ANNUITY:
spending and capital spending (though the bulk is revenue spending). The amount to which a stream of equal cash flows that occur in equal
intervals will discount back to present when it is depreciated in an
PERSONAL IDENTIFICATION NUMBER (PIN): account paying compound interest.
Personal Identification Number is a number which an ATM card holder
has to key in before he is authorized to do any banking transaction in a PRICE/EARNINGS RATIO (P/E):
ATM. The measure to determine how the market is pricing the company’s
common stock. The price/earnings (P/E) ratio relates the company’s
PLASTIC MONEY: earnings per share (EPS) to the market price of its stock.
Credit Cards, Debit Cards, ATM Cards and International Cards are
considered plastic money as like money they can enable us to get PRIMARY DEALERS:
goods and services. (PDs) In India the primary dealer system was set up in 1995 to
strengthen and develop the government securities market and
PLEDGE: enhance the efficiency of open market operation. Primary dealers can
A bailment of goods as security for payment of a debt or performance be subsidiaries of scheduled commercial banks, or all India financial
of a promise, e.g pledge of stock by a borrower to a banker for a credit institutions or companies under the companies act 1956 engaged
limit. Pledge can be made in movable goods only. predominantly in government securities market and subsidiaries of
foreign banks or securities firms. Every PD has to maintain minimum
Post-Dated Cheque: net owned funds of Rs 50 crores deployed daily in the government
A Cheque which bears the date which is subsequent to the date when securities market. They are subjected to certain obligations with
it is drawn. For example, a cheque drawn on 8th of February, 2007 regard to bidding, turnover, commitments etc. RBI provides liquidity
bears the date of 12th February, 2007. support to PDs against central government securities.

PROSPECTUS: PRIORITY SECTOR ADVANCES:

A detailed report published by the Initial Public Offering company, Priority Sector advances broadly comprise advances to agriculture,
which includes all terms and conditions, application procedures, IPO (both direct and indirect) small scale industries, other activities/
prices etc, for the IPO borrowers, such as small business, retail trade, small road and water
transport operators, professionals and self employed persons, housing

57
and educational loans, micro credit to self help groups, consumption PUBLIC DEBT:
loans, small loans to software and food processing sector. Refers to the means by which the government raises resources for
financing public expenditure by issuing government securities both
PRIME LENDING RATE: long term and short term securities like treasury bills. Internal debt of
The rate of interest charged by banks on working capital and short- the Central government includes loans floated on the Comment
term loans to their most creditworthy borrowers. The prime lending market, bonds such as prize bonds, bank compensation bonds,
rate serves as a benchmark for deciding on the interest rate to be treasurry bills and non-negotiable non interest-bearing securities
charged to other borrowers. Accordingly, major banks and also issued to international financial institutions like IMF, IBRD. Apart from
Financial Institutions periodically announce their PLRs depending on this there are "other liabilities" of the Union Government, comprising
their cost of funds and competitive lending rates. From October 1997, small savings, state provident funds, postal insurance and life annuity
the Reserve Bank of India’ has decided to permit banks to announce fund etc. These liabilities are also to be serviced through interest
separate Prime Term Lending Rates on term loans of three years and payments and redemption on maturity. Government securities are in
beyond. More recently, banks have been given the freedom to have the form of government promissory notes or in the form of stock
different PLRs for different maturities. Now it has been substituted by certificates. Government promissory note is a negotiable instrument
Base Rate (w.e.f. July 01, 2010) Privatization: The sale of government- and transferable by endorsement and delivery. Stock can be in the
owned equity in nationalized industry or other commercial enterprises form of book debt which could be held in the form of stock certificate
to private investors. or an account called subsidiary general ledger account. Stock
certificate is not negotiable but transferable by execution of transfer
PREMATURE WITHDRAWALS: deed and registration of change in the name in the books of Public
Term deposits like Fixed Deposits, Call Deposits, Short Deposits and Debt Office of RBI. Thus, public debt consists of total value of
Recurring Deposits have to mature on a particular day. When these accumulated borrowings by the government from the public-house
deposits are sought to be withdrawn before maturity, it is premature holds, banks, and financial institutions and others.
withdrawal.
PURCHASING POWER PARITY (PPP):
PRIME LENDING RATE (PLR): This refers to a theory of exchange rate based on relative domestic
The rate at which banks lend to their best (prime) customers. Priority and foreign prices and used as a valuable tool for assessing proper
Sector Advances : consist of loans and advances to Agriculture, Small currency valuation and measuring relative competitiveness. The basic
Scale Industry, Small Road and Water Transport Operators, Retail proposition of PPP is that identical goods must sell at identical prices
Trade, Small Business with limits on investment in equipments, in a competitive market place. Otherwise, there will be opportunities
professional and self employed persons, state sponsored for arbitrage. Competition will tend to equalise the price of identical
organizations for lending to SC/ST, Educational Loans, Housing Finance basket of goods in domestic and foreign markets, through movements
up to certain limits, self-help groups and consumption loans. in exchange rate or through competitive bidding of the price of the
commodities. Under PPP, exchange rate is in equilibrium when it
PROMISSORY NOTE: equalises the prices of basket of similar goods and services in two
Promissory Note is a promise / undertaking given by one person in countries. The PPP in other words is the ratio of the level of prices
writing to another person, to pay to that person, a certain sum of abroad to the level of home prices. This measurement called absolute
money on demand or on a future day. PPP does not often hold true because of quality differences,
transportation costs, and other tariffs etc and therefore a relative
PROVISIONING: version of PPP is suggested focussing on changes in prices and
Provisioning is made for the likely loss in the profit and loss account exchange rates. This version of PPP predicts that changes in the
while finalizing accounts of banks. All banks are supposed to make nominal exchange rates will reflect differences in inflation rates
assets classification and make appropriate provisions for likely losses among countries over time. Thus the countries in which inflation is
in their balance sheets. persistently higher than that of the trading partners will experience a
devaluation of their currencies.

PUT OPTION:
PUBLIC SECTOR BANK: The right to sell the underlying securities at a specified exercise price
A bank fully or partly owned by the Government. on of before a specified expiration date.

R
RATE OF RETURN: terms but also in price level adjusted terms. The Reserve Bank of India
A percentage showing the amount of investment gain or loss against presently compiles and publishes six - country and 36- country indices
the initial investment. Real Interest Rate: The net interest rate over of NEER and REER.
the inflation rate. The growth rate of purchasing power derived from
an investment. RECESSION:
Refers to business condition with mild tapering off of economic
REAL EFFECTIVE EXCHANGE RATE (REER): activity not qualifying to be called phase of depression. The text book
The multilateral trade weighted real effective exchange rate (REER) is definition of recession is two consecutive quarters of declining out
a weighted average of real exchange rate in respect of basket of put. Recession can also be used to describe any period in which
countries with which the country trades; the real exchange rate is growth falls below an economy's trend growth rate.
obtained by deflating the nominal exchange rates with the relative
price differential between the domestic and foreign countries. Thus REDEMPTION VALUE:
REER is the weighted average of NEER adjusted by the ratio of The value of a bond when redeemed.
domestic price to foreign prices. It is one of the most commonly used
indicators of international competitiveness. Since price differential REGULATION:
between the trading countries is a factor determining exchange rate Regulation refers to codification of sound principles, norms and
of the respective countries, price -adjusted measure (REER) is practices in relation to financial institutions or banks.
considered more effective for policy making. REER is a way of
measuring the price of foreign goods not just in currency- adjusted REGULATORY CAPITAL:

58
As per the Basel Accord Regulatory Capital refers to the minimum  Revenue spending (revenue expenditure) takes place from
capital required to be maintained by the bank (regulatory minima) this budget.
against its risk weighted assets as defined in the 1988 capital accord  Salaries of government employees and military staff, perks
with subsequent amendments and prescribed by the national for ministers, office furniture, grants to state governments,
supervisor. subsidies, interest to be paid on loans taken and pensions
for ex-defense staff are all accounted for here and referred
Reinvestment Value: to as revenue spending.
The rate at which an investor assumes interest payments made on a  Any expenditure required for the normal running of the
bond which can be reinvested over the life of that security. government.
 This spending must be financed from the revenue that the
Relative Strength Index (RSI): government earns in the form of taxes (corporate, income),
A stock’s price that changes over a period of time relative to that of a duties (excise, custom), receipts, fees, interest and dividends
market index such as the Standard & Poor’s 500, usually measured on (if the government makes investments).
a scale from 1 to 100, 1 being the worst and 100 being the best.  Capital Budget
 Capital spending (capital expenditure) refers to the money
REPURCHASE AGREEMENT: spent on creating assets (roads, highways, dams), buying
An ARRANGEMENT in which a security is sold and later bought back at land or buildings, purchasing machinery and equipment.
an agreed price and time.  This spending is financed from loans from the public (market
loans), from the Reserve bank of India (the country’s central
REPO (REPURCHASE OBLIGATION): bank), from foreign governments or international
Repo rate is the rate at which our banks borrow rupees from RBI. This organizations like the World Bank.
facility is for short term measure and to fill gaps between demand and  Also included are any investments made by the government
supply of money in a bank .when a bank is short of funds they they in shares or other such instruments.
borrow from bank at repo rate and if bank has a surplus fund then the  Loans the government earlier gave other states or Union
deposit the funds with RBI and earn at Reverse repo rate OR, The Territories and are now repaid find their way here.
Reserve Bank manages day to day liquidity or short term mismatches
under different financial market conditions through repo and reverse RIGHT TO INFORMATION ACT 2005:
repo auctions. This, in addition to bringing in stable condition in the The Government of India has enacted the Right to Information Act,
money market, sets the pace for short term interest rate. Repo 2005 which has come into effect from October 13, 2005. The Right to
involves two legs of transactions. In the first leg RBI buys securities information under this act is meant to give to the citizens of India
and injects liquidity by paying cash to the seller. In the second leg RBI access to information under control of public authorities to promote
releases securities against receipt of money from the counter party. transparency and accountability in these organisations. The Act, under
Repo provides a collateralised-funding alternative. The RBI has sections 8 and 9, provides for certain categories of information to be
enabled NBFCs, mutual funds, housing finance companies and exempt from disclosure. The Act also provides for appointment of a
insurance companies to undertake repo transactions, through gilt Chief Public Information officer to deal with requests for information.
accounts maintained with the custodians. The Reserve Bank of India is a public authority as defined in the Right
to Information Act 2005. As such, the Reserve Bank of India is obliged
RESISTANCE LEVEL: to provide information to members of public.
A price at which sellers consistently outnumber buyers, preventing
further price rises. RIGHT OF APPROPRIATION:
As per Section 59 of the Indian Contract Act, 1972 while making the
RETURN: payment, a debtor has the right to direct his creditor to appropriate
Amount of investment gain or loss. such amount against discharge of some particular debt. If the debtor
does not do so, the banker can appropriate the payment to any debt
RESCHEDULING OF PAYMENT: of his customer.
Rearranging the repayment of a debt over a longer period than
originally agreed upon due to financial difficulties of the borrower. RIGHT OF SET-OFF :
When a banker combines two accounts in the name of the same
RESTRICTIVE ENDORSEMENT: customer and adjusts the debit balance in one account with the credit
Where endorser desires that instrument is to be paid to particular balance in other account, it is called right of set-off. For example, debit
person only, he restricts further negotiation or transfer by such words balance of Rs.50,000/- in overdraft account can be set off against
as "Pay to Ashok only". Now Ashok cannot negotiate the instrument credit balance of Rs.75,000/- in the Savings Bank Account of the same
further. customer, leaving a balance of Rs.25,000/- credit in the savings
account.
REVERSE REPO:
is the rate which is paid by RBI to banks on Deposit of funds with RBI.A RIGHTS ISSUE:
reduction in the repo rate will help banks to get money at a cheaper An offer by way of rights to current holders of securities that allows
rate. When the repo rate increases borrowing from RBI becomes more them to subscribe for securities in proportion to their existing
expensive.To borrow from RBi bank have to submit liquid bonds /Govt holdings.
Bonds as collateral security ,so this facility is a short term gap filling
facility and bank does not use this facility to Lend more to their RISK ASSET RATIO:
customers. OR, This is opposite of the repo transaction. In the first leg In 1988 Basel Committee on Banking Supervision prescribed a
RBI sells securities and absorbs liquidity. In the second leg RBI buys common minimum capital standard to banking industry of group of 10
back the securities and releases value equivalent to the amount given countries (G-10) in the context of the need for management of cross
in the first leg plus interest at reverse repo rate on the amount given border capital flows following oil crisis and international debt crisis. In
in the first leg. This instrument is used for absorbing liquidity from the the adoption of Basel Committee frame work on capital adequacy
system for short periods. norms taking into account various element of risks, the RBI decided to
REVENUE & CAPITAL BUDGET: introduce a Risk Asset Ratio system for banks in India as a capital
Revenue Budget adequacy measure .In this system, the balance sheet assets, non-

59
funded items and other off balance sheet exposures are assigned The banks operating in the liberalised environment are exposed to
weights according to perceived risks. Banks have to maintain different kinds of risks, which can be broadly grouped into business
unimpaired minimum capital funds equivalent to prescribed ratio on risk and control risk. The important business and control risks are
the aggregate of risks weighted assets and other exposures (1) credit risk arising from nature of their business activity
continuously. The ratio of capital to risk weighted assets is known as (2) market risk in the form of potential erosion in the income or
CRAR. market value arising from the interest rate or foreign exchange rate or
equity price or commodity price variation,
RISK ADJUSTED RETURN ON CAPITAL (RAROC): (3) liquidity risk arising from the inability to meet their liabilities
An approach to relate the return on capital to the riskiness of the whenever they fall due because of mismatch of flow of funds &
investment. Using a hurdle rate (i.e. expected rate of return) a lender (4) operational risks emanating from failed internal process, people or
can use the RAROC principle to set the target price of a transaction. system or from external events and
Risk Adjusted Return on Capital (RARCO) is a concept used in Credit (5) information and technology risks. The banks are required to put in
Risk management and is a risk based profitability measurement for place appropriate risk management policies.
analysing risk-adjusted financial performance and providing a
consistent view of profitability across portfolios. It is defined as the RISK-AVERSE, RISK-NEUTRAL, RISK-TAKING:
ratio of risk adjusted return to economic capital or Return on Capital Risk-averse describes an investor who requires greater return in
adjusted for expected losses. exchange for greater risk. Risk-neutral describes an investor who does
not require greater return in exchange for greater risk. Risk-taking
RISK BASED SUPERVISION (RBS): describes an investor who will accept a lower return in exchange for
This exercise essentially involves continuous monitoring and greater risk.
evaluation of risk profiles of the supervised institutions in relation to
their business strategy and exposures. The basis of the instruments of RTGS SYSTEM:
RBS will be the supervisory tools used for on-site examination and off- The acronym 'RTGS' stands for Real Time Gross Comment Settlement.
site monitoring under the CAMELS. Risk assessment of the bank is RTGS system is a funds transfer mechanism where transfer of money
carried out before the on-site inspection process. The strengths and takes place from one bank to another on a 'real time' and on 'gross'
vulnerabilities are identified on an on-going basis. A bank specific basis. This is the fastest possible money transfer system through the
supervisory programme is drawn up on the basis of inputs gathered banking channel. Settlement in 'real time' means payment transaction
with the help of supervised bank. The periodicity of the inspection is is not subjected to any waiting period. The transactions are settled as
determined having regard to the risk profile of the bank and it covers soon as they are processed. 'Gross settlement' means the transaction
all identified high- risk areas. is settled on one to one basis without bunching with any other
transaction.
RISK MANAGEMENT:
S
SAFE CUSTODY: Banks in the country are broadly classified as scheduled banks and
When articles of value like jewellery, boxes, shares, debentures, non- scheduled banks. A scheduled bank, which could be either
Government bonds, Wills or other documents or articles are given to a cooperative bank or commercial bank, is one which has been included
bank for safe keeping in its safe vault, it is called safe custody.. Bank in the Second schedule of the Reserve Bank of India Act. These banks
charges a fee from its clients for such safe custody. are eligible for certain facilities such as financial accommodation from
RBI and are required to fulfil certain statutory obligation. The RBI is
SAVING: empowered to exclude any bank from the schedule whose
Saving is that part of the disposable income which is not consumed. It (1) aggregate value of paid up capital and reserves fall below Rs 5 lakh
amounts to accumulation of wealth through postponement of (2) affairs are conducted in a manner detrimental to the interests of
consumption. Saving and capital formation play a crucial role in depositors and
economic development. For estimation of domestic saving, the (3) goes into liquidation and ceases to transact banking business.
economy is divided into three sectors; the public sector, the private
corporate sector (organized sector) and the household sector SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS:
(unorganized sector). Household sector consists of farm households, The government of India enacted the Securitisation and
unincorporated enterprises engaged in industry, trade, finance, Reconstruction of Financial Assets and Enforcement of Security
transport etc; charitable trusts and household proper. Public sector Interest Act in 2002 to provide among other things, for enforcement
savings represent savings of Government administration, of security interest for realisation of dues without the interventions of
departmental commercial enterprises, and nondepartmental non- courts and tribunals. Secured creditors are enabled to authorise their
financial and financial enterprises. Savings of household sector, which officials to enforce the securities and recover the dues from the
account for more than 2/3 of gross domestic savings in the country, borrowers. Since the Act provides for sale of financial assets by banks
are in the form of financial assets like currency, bank deposits, life and financial institution to securitisation companies (SCs) or
insurance funds, provident funds, investment in shares/debentures, reconstruction companies (RCs) guidelines have been issued to ensure
small savings etc; and physical assets such as investments in that the process of asset reconstruction proceeds on sound lines.
machinery and equipment, investment in agriculture, non-farm
business and inventories held by household sector. The rate of saving SEIGNIORAGE:
is measured as the proportion of gross domestic savings to Gross Net revenue gained from the issuing of currency and coins. It arises
Domestic Product. Income and interest rates are the major from the difference between the face value of a currency note and the
determinants of rate of saving. Savings Bank Account: All banks in cost of producing, distributing and eventually withdrawing it from
India are having the facility of opening savings bank account with a circulation.
nominal balance. This account is used for personal purposes and not
for business purpose and there are certain restrictions on withdrawals SELECTIVE CREDIT CONTROL:
from this type of account. Account holder gets nominal interest in this Selective credit control, as distinguished from general credit control is
account. operated to ensure an adequate credit flow to the desired sectors
while preventing excessive credit for less essential economic activities.
SCHEDULED BANKS: The techniques of selective credit control involves prescribing

60
(1) minimum margin for lending against the value of specified member banks. India became a SWIFT member in 1991. Each bank is
securities given a unique code by SWIFT.
(2) ceiling on the level of credit and
(3) minimum rate of interest on advances. Selective credit control is SOILED CURRENCY NOTES:
usually applied to achieve a reduction in excessive advances against A note which has become limp or which has developed minor cuts due
certain sensitive commodities in short supply and to reduce pressure to wear and tear or which is disfigured by oil, colour, ink etc. will be
on demand supported by bank credit. treated as a soiled note. Notes, which have been divided vertically
through or near the centre with numbers in tact are, also treated as
SELF-HELP GROUPS OR MICRO CREDIT PROGRAMME: soiled notes. These notes can be exchanged at the offices of RBI and
Defined as a group of individual members who voluntarily come public sector currency chest branches of private sector banks.
together for a common collective purpose basically for savings and
borrowings. In practice these groups are comprised of individual SOFT CURRENCY:
members known to each other coming from the same village, Soft currency is opposite of hard currency and it indicates a type of
community and even neighbourhood (homogenous group) and have currency whose value may depreciate rapidly or that is difficult to
certain pre-group social binding factors. Micro credit programme, convert into other currencies. Soft currency can be in the form of
enabling the poor people to be thrifty and in accessing loans and other paper, electronic or debt-based “IOUS” which have in the past been
financial services, was launched in 1992 with a SHG- BANK linkage used in place of hard currency. This currency has limited convertibility
arrangement. The poor are encouraged to voluntarily come together into gold and other currencies.
to save small amounts regularly and extent small loans among
themselves. On attaining maturity to handle their own resources, they SPECULATION:
are in a position to negotiate with banks for credit facilities. The process of buying investment vehicles in which the future value
and level of expected earnings are highly uncertain. Stock Splits:
SERVICE AREA APPROACH (SAA): Wholesale changes in the number of shares. For example, a two for
The Scheme was introduced in April 1989 with a view to bringing one split doubles the number of shares but does not change the share
about an orderly and planned development of rural and semi-urban capital.
areas of the country. Under the scheme all rural and semi-urban
branches of banks were allotted specific villages generally SUBORDINATED BOND:
geographically contiguous areas with the responsibility to take care of An issue that ranks after secured debt, debenture, and other bonds,
the overall development and the credit needs. The Scheme involves and after some general creditors in its claim on assets and earnings.
credit planning and monitoring of credit utilisation and enables rural Owners of this kind of bond stand last in line among creditors, but
borrowers to have easy access to credit from any bank of their choice before equity holders, when an issuer fails financially.
at a competitive price.
SUBSTANTIAL SHAREHOLDER:
SENIOR BOND: A person acquires an interest in relevant share capital equal to, or
A bond that has priority over other bonds in claiming assets and exceeding, 10% of the share capital. Support Level: A price at which
dividends. Settlement: Conclusion of a securities transaction when a buyers consistently outnumber sellers, preventing further price falls.
customer pays a broker/dealer for securities purchased or delivered,
securities sold, and receive from the broker the proceeds of a sale. STATUTORY LIQUIDITY RATIO (SLR):
is the amount a commercial bank needs to maintain in the form of
SHORT HEDGE: cash, or gold or govt. approved securities (Bonds) before providing
A transaction that protects the value of an asset held by taking a short credit to its customers. SLR rate is determined and maintained by the
position in a futures contract. Short Position: Investors sell securities RBI (Reserve Bank of India) in order to control the expansion of bank
in the hope that they will decrease in value and can be bought at a credit.Generally this mandatory ration is complied by investing in Govt
later date for profit. Short Selling: The sale of borrowed securities, bonds. OR, Under the provision of Banking Regulation Act governing
their eventual repurchase by the short seller at a lower price and their the banking operations, banks are required to hold liquid assets such
return to the lender. as government securities, or other unencumbered approved
securities, cash or gold, against their demand and time liabilities in
SHREDDING AND BRIQUETTING SYSTEM: India. This is known as supplementary reserve requirement or
A system for destruction of unusable notes at the RBI. The system cuts secondary reserve requirement. The main objective of this monetary
the notes into small pieces and then converts them into fine shreds. policy instrument is to ensure solvency of commercial banks by
These shreds are then automatically channelled into the briquetting compelling them to hold low risk assets up to a stipulated extent. It
system which compresses them under high pressure resulting into also helps to regulate the pace of credit expansion to commercial
formation of briquettes. sector. SLR refers to the ratio of holdings of the prescribed liquid
assets to total time and demand liabilities.
SMALL COIN DEPOT:
Small coin depots of the Government of India have been established STERILISATION:
at important branches of commercial banks and treasuries to facilitate Denotes the process whereby the monetary impact of the liquidity
distribution of small coins (paise 50 and below). RBI makes generated by accretion to the foreign exchange assets of RBI is
arrangements to keep adequate stock of coins at these depots so as to neutralised through the use of open market operation or liquidity
enable the treasury/bank to meet the demand for small coins. Surplus adjustment facility or cash reserve ratio
balances of coins are put back to the depots. Any withdrawal from or
deposit into a depot is required to be reported to RBI where STOCK EXCHANGES:
adjustments are made to the credit or debit to the government. It is a market in which securities are bought and sold. The economic
importance of stock exchanges is that they facilitate saving and
SOCIETY FOR WORLD-WIDE INTER-BANK FINANCIAL investment, first by making it possible for investors to dispose of
TELECOMMUNICATION (SWIFT): securities quickly if they wish to do so, and secondly in channeling
Stands for international computerised telecommunication network savings into productive investment. However, they are declining in
headquartered at La Hulpe, Belgium. It was operationalised in 1977 importance as a source of new capital for industrial and commercial
and operates from more than 100 countries. There are over 4000 companies. Ready marketability requires that new issues should be

61
made or backed by reputable borrowers or institutions, that characteristic of a subsidy, as distinct from a Transfer Payment, is that
information should be available on existing securities, and that there it has the object of keeping prices below the Factor cost of production.
should be both a legal framework and market rules to prevent fraud Subsidies, by distorting market prices and costs, may lead to a
and sharp practice. Stock exchanges have their own rules and misallocation of resources although they may be justified in certain
conventions, but their functioning depends also on the existence of circumstances (for example to correct for Externalities) and may be
company and other law and financial intermediaries, such as the used banned by international agreements. It may be possible to
issuing Houses. achieve the objectives of subsidies by alternative means which have
less distorting Comment effects, for example by direct income support
SUBSIDY: through the taxation system.
It refers to government grants to suppliers of goods and services. A
subsidy may be intended to keep prices down (i.e. to raise real SUPERVISION:
incomes of buyers), to maintain incomes of producers (for example Is a means of ensuring that the banks or financial institutions comply
farmers) or to maintain a service or employment. An essential with the prescribed regulations.
T
TAX HAVEN:
An offshore financial centre having legal mechanisms to reduce or TIGHT MONEY POLICY:
eliminate taxes on income, wealth, profits and inheritance or to Refers to the monetary policy of restraining or reducing the money
accumulate tax free income offshore pending repatriation to a taxable supply and of raising interest rates. This policy may have the effect of
jurisdiction. slowing the GDP growth, reducing the rate of inflation or raising the
nation's foreign exchange rates. Time Horizon: The duration of time an
TERMS OF TRADE: investment is intended for.
Term expresses the relationship between Unit values of exports and
imports at any particular date and changes in them over a period of TREASURY BILLS:
time. It is a ratio of a country's export prices to its import prices and These bills are the main instrument of short-term borrowing by the
measures the purchasing power of its exports in terms of the imports. government and serve as convenient gilt edged security for the money
The base measure is the level of export prices divided by the level of market. The Reserve Bank, as an agent of the government, sells
import prices; this measure as of a particular date is taken as the base treasury bills at a "discount". The difference between the amount paid
and for measurements at subsequent dates. Usually expressed in the by the tenderer at the time of purchase (less than face value) and the
form of an index number, it indicates change in the relative prices over amount received on maturity represent the amount of interest and
the period. A rise is commonly described as "favourable" movement. A known as discount. These are negotiable securities and can be
rise in terms of trade may occur because export prices rise faster than rediscounted with the Reserve Bank at any time before maturity upon
imports prices and a given quantity of exports would buy larger terms and conditions prescribed by the bank. Presently treasury bills
imports, than before. of 91days and 364 days of maturity are sold through weekly auctions.

TELLER : TRADING RULES:

Teller is a staff member of a bank who accepts deposits, cashes Stipulation of parameters for opening and intra-day quotations,
cheques and performs other banking services for the public. Technical permissible spreads according to the prices of securities available for
Analysis: A method of evaluating securities by relying on the trading and board lot sizes for each security.
assumption that market data, such as charts of price, volume, and
open interest, can help predict future (usually short-term) market TRUST DEED:
trends. Contrasted with fundamental analysis which involves the study A formal document that creates a trust. It states the purpose and
of financial accounts and other information about the company. (It is terms of the name of the trustees and beneficiaries.
an attempt to predict movements in security prices from their trading
volume history.)
U
UNDERWRITING :
is an agreement by the underwriter to buy on a fixed date and at a UNIVERSAL BANKING :
fixed rate, the unsubscribed portion of shares or debentures or other When Banks and Financial Institutions are allowed to undertake all
issues. Underwriter gets commission for this agreement. types of activities related to banking like acceptance of deposits,
granting of advances, investment, issue of credit cards, project
UNDERLYING SECURITY: finance, venture capital finance, foreign exchange business, insurance
The security subject to being purchased or sold upon exercise of the etc. it is called Universal Banking.
option contract.
V
VALUATION: Venture capital is money provided by an outside investor to finance a
Process by which an investor determines the worth of a security using new, growing, or troubled business. The venture capitalist provides
risk and return concept. the funding knowing that there’s a significant risk associated with the
company’s future profits and cash flow. Capital is invested in exchange
VALUE DATE: for an equity stake in the business rather than given as a loan, and the
Denotes maturity date of a spot or forward contract investor hopes the investment will yield a better-thanaverage return.

VARIABLE RESERVE RATIO: VIRTUAL BANKING:

An important monetary policy instrument and refers to the Cash
Reserve Ratio (CRR) to be maintained by the banks under the
provision of RBI Act 1934 and Statutory Liquidity Ratio (SLR) as defined
under the Banking Regulation Act 1947.
VENTURE CAPITAL:
Virtual banking is also called internet banking, through which financial
and banking services are accessed via internet's World Wide Web. It is
called virtual banking because an internet bank has no boundaries of
brick and mortar and it exists only on the internet.
VOSTRO ACCOUNT:
Vostro account means "your account with me". The counterpart to
nostro account is vostro (Latin "yours") which describes the record of

62
an account held by a bank as correspondent on behalf of an overseas in India. They are rupee accounts.
bank. These are the accounts opened by banks abroad with the banks
W
WARRANT: from the date the advance in terms of the Central government's
An option for a longer period of time giving the buyer the right to buy agreement with RBI in respect of the maximum amount and rate of
a number of shares of common stock in company at a specified price interest.
for a specified period of time.
WHOLESALE PRICE INDEX (WPI):
WAYS AND MEANS ADVANCES (WMA): The Wholesale Price Index (WPI) is the index used to measure the
Under the RBI Act the Reserve Bank provides Ways and Means changes in the average price level of goods traded in wholesale
Advances to the State Governments to help tide over the temporary market. A total of 435 commodity prices make up the index. It is
mismatches in the cash flow of their receipts and payments. While available on a weekly basis. It is generally taken as an indicator of the
normal WMAs are clean advances, special WMAs are secured inflation rate in the Indian economy. The Indian Wholesale Price Index
advances provided against the security of Government of India dated (WPI) was first published in 1902, and was used by policy makers until
securities. The normal WMAs are revised every year. No state it was replaced by the Producer Price Index (PPI) in 1978.
government is allowed to have an over draft position for more than a
stipulated number of working days. If the overdraft persists beyond WHOLESALE BANKING:
the stipulated period the RBI suspends the payments. The interest rate Wholesale banking is different from Retail Banking as its focus is on
on WMA has been linked to repo rate. Since the abolition of the providing for financial needs of industry and institutional clients.
automatic creation of ad-hoc treasury bills in 1997 a system of ways
and means advances to the Union Government was introduced to WINDOW DRESSING:
meet the temporary mismatch between the receipts and payments of Financial adjustments made solely for the purpose of accounting
Union Government. These loans are repayable within three months presentation, normally at the time of auditing of company accounts.
Y
YIELD TO MATURITY (YTM):
YIELD CURVE: The annual return on a bond from the date of acquisition to the date
Relation between the interest rate and the time to maturity of the of maturity. It is the discount rate that equates the present value of
debt for a given borrower in a given currency. Yield (Internal rate of cashflows from the bond to the current price of the bond. If the bond
Return): The compound annual rate of return earned by an is bought at par the yield to maturity is the same as the nominal yield.
investment If bought at premium, the yield to maturity is less than the nominal
yield. If bought at discount the yield to maturity is more than the
nominal yield
Z
not receive any interest during the life of the bonds. Instead investors
ZERO COUPON BONDS: buy zero coupon bonds at a deep discount from their face value,
The regular government bond has a "coupon" (interest bearing which is the amount a bond will be worth when it matures. To put it
certificate) that is payable twice a year. Interest is paid two times a differently, it is a special type of bond which carries no coupon rate, is
year, and therefore, there are regular cash inflows. Such bonds are sold at a deep discount in relation to its face value, and matures at its
normally issued at face value and the redemption value of the bond is face value. The maturity dates on zero coupon bonds are normally
also the face value. The subscribers/holders to zero coupon bonds do long term, ten years, fifteen years or more.
Financial Inclusion in India
The Reserve Bank of India 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). In the report RBI exhorted the banks with a view of achieving greater
financial inclusion to make available a basic "no-frills" banking account. In India, Financial Inclusion first featured in 2005, when it was
introduced by K C Chakraborthy, former chairman of Indian Bank. Mangalam Village became the first village in India where all households were
provided banking facilities. Norms were relaxed for people intending to open accounts with annual deposits of less than Rs. 50,000. General
Credit Cards (GCC) were issued to the poor and the disadvantaged with a view to help them access easy credit. In January 2006, the Reserve
Bank permitted commercial banks to make use of the services of non-governmental organizations (NGOs/SHGs), micro-finance institutions and
other civil society organizations as intermediaries for providing financial and banking services. These intermediaries could be used as business
facilitators (BF) or business correspondents (BC) by commercial banks. The bank asked the commercial banks in different regions to start a
100% financial inclusion campaign on a pilot basis. As a result of the campaign states or U.T.s like Pondicherry, Himachal Pradesh and Kerala
announced 100% financial inclusion in all their districts. Reserve Bank of India’s vision for 2020 is to open nearly 600 million new customers'
accounts and service them through a variety of channels by leveraging on IT. However, illiteracy and the low income savings and lack of bank
branches in rural areas continue to be a road block to financial inclusion in many states and there is inadequate legal and financial structure.
Controversy
Financial Inclusion in India is often closely connected to the aggressive microcredit policies that were introduced without the appropriate
regulations over-site or consumer education policies. The result was consumers becoming quickly over indebted to the point of committing
suicide and the lending institutions seeing repayment rates collapse, threatening the existence of the entire 4 billion a year Indian microcredit
industry. This crisis has often been compared to the mortgage lending crisis in the US. The challenge for those working in the financial inclusion
field has been to separate micro-credit as only one aspect of the larger financial inclusion efforts, and use the Indian crisis as an example of the
importance of having the appropriate regulatory and educational policy framework in place

Simplifying Impact of CRR/ SLR/ Repo/ Reverse Repo on Inflation and Interest rates:
SLR and Cash reserve ratio is maintained for bank solvency and Higher ratio of SLR and CRR makes bank relatively safe as higher ratio means
they have more of their funds deposited in liquid securities and can fulfill the demand on redemption of deposit from the Bank.lets take an
example :suppose a Bank has taken a deposit of 100 from public and CRR is 5 and SLR is 24 then available funds to lend from deposits with the
bank will be 100-5-24=71 so their is direct relation between CRR ,SLR and Funds available with bank to lend to public out of deposit received
from public.

63
Impact on Interest rates of this ratios:
Now take point what will be the impact on Interest rates of this ratios: Interest rate are fixed on the Demand supply situation of the amount
available with person who want to lend and and person who want to borrow and interest rate is fixed on demand supply of the funds if demand
is more and supply is less then interest rate rises up and if demand is less and supply is excessive then interest rate comes down .this relation is
based on many assumption as said above.
So RBI is controlling the supply side of the Funds and by changes in CRR and SLR, Bank control the supply side of the money. so when RBI
increase these ratio then available funds with the banks will go down and as demand remain the same then people will have to pay more as
interest and interest rate will go up.On the reverse if RBI reduce these rates ,then amount available with bank for lending will be increased and
they have to reduce rates to lend more. In these situation bank also reduce the rate of short term deposit from public as they have surplus
money already to lend. so these rates have double impact the first direct effect is ,bank reduce rate of lending so more money is available with
people and second is interest on Deposit will be reduced so more money will be available with the people.
But other side of interest rate i.e demand/off take of loan is also important to set the interest rate .This may be some time region wise and
seasonal or other factor also effect the decision of Interest rate.

Impact on inflation
As from the above para we have understood that how these ratio reduce or increase the money supply in the system and we know if more
person is demanding few goods then price of goods tends to increase and its called inflation so when RBI reduce these ratios then money supply
in market increases and inflation is rises further but in present case this is not the correct and right relation. The Increase in CRR will squeeze
36000 crore from market ,so less money will chase few things means less demand so it will reduce Inflation.
At the time of depression the reduction of these ratio is to maintain liquidity without disturbing inflation much. while marked is falling and each
and every commodity rate going downwards. In these situation after increasing of money supply inflation rate does not goes up as the demand
is slow and reduction in commodity prices will nullify the impact of increase in money supply and have less inflationary effects.
But sometimes in few cases Inflation is due to supply side, like in case of pulses and sugar the demand is some what the same but production
has been reduced and rate has been doubled. In these types of cases Ever Increase in CRR will not have much impact as the problem is from
supply side.

Impact of crises on exchange rate:

please note that this explanation is based on many assumptions, Dollar rate is fixed by demand and supply position of dollar so if there is less
supply and more demand of dollar then dollar-rupee exchange rate will go up means dollar value will increase. In present scenario dollar has
risen up not the rupee has gone down means the issue is related to more to dollar and less to rupee. More over dollar exchange rates has risen
up with all major currencies of the world so as rupee.

Chapter-6
BANKING & FINANCE ABBREVIATIONS
A&A Accounting and auditing BOLT BSE On-Line Trading (System)
ACU Asian Currency Union BSCS DESACS RBI Basel Committee on Banking Supervision
AD Authorized Dealer BSE Bombay Stock Exchange
ADB Asian Development Bank BSR Basic Statistical Returns
ADC Access Deficit Charge BRICS Brazil Russia India China and South Africa
ADF Asian Development Fund CA Chartered Accountant
ADR American Depository Receipt CAD Capital Account Deficit
AFS Annual Financial Statement CAG Controller and Auditor General of India
AFS Available For Sale CBS Consolidated Banking Statistics, Core Banking Sollution
AGM Annual General Meeting CC Cash Credit
AG Accountant General CD Certificate of Deposit
AIR Annual Information Report CD Ratio Credit Deposit Ratio
AIRCSC All India Rural Credit Survey Committee CDBS Committee of Direction on Banking Statistics
AITUC All India Trade Union Congress CF Company Finance
AMC Asset Management Companies CFRA Combined Finance and Revenue Accounts
APC Agricultural Prices Commission CGRA Currency and Gold Revaluation Account
APEC Asia-Pacific Economic Cooperation CII Confederation of Indian Industries
ARC Asset Reconstruction Company CIBIL Credit Information Bureau (India) Ltd
ARDR Agricultural and Rural Debt Relief CITU Centre of Indian Trade Unions
ARIMA Auto-Regressive Integrated Moving Average CO Capital Outlay
ASEAN Association of South-East Asian Nations CP Commercial Paper
ASBA Application Supported by Blocked Amount CPI Consumer Price Index
ASEM Asia-Europe Meeting CPI-IW Consumer Price Index for Industrial Workers
ASSOCHAM Associated Chambers of Commerce and CR Capital Receipts
Industry of India CRAR Capital to Risk Weighted Asset Ratio
ATM Asynchronous Transfer Mode CRISIL Credit Rating Information Services of India Limited
AUM Assets Under Management CRR Cash Reserve Ratio
ATM Automated Teller Machine CSIR Council of Scientific and Industrial Research
AVM Additional Volatility Margin CSO Central Statistical Organisation
BICP Bureau of Industrial Costs and Prices CTT Commodities Transaction Tax
BIFR Board of Industrial and Financial Reconstruction CVC Central Vigilance Commission
BIS Bank for International Settlements DA Dearness Allowance
BOI Bank of India DAP Development Action Plan
BOP Balance of Payments DBOD Department of Banking Operations and Development

64
DCA Department of Companies Affairs GFD Gross Fiscal Deficit
DCB Demand Collection and Balance GFS Government Finance Statistics
DCCB District Central Cooperative Bank GIC General Insurance Corporation
DCM Department of Currency Management GLS Generalized Least Squares
DD Demand Draft GNP Gross National Product
DEIO Department of External Investments and Operations GNIE Government Not Included Elsewhere
DDS Data Dissemination Standards GoI Government of India
DESACS Department of Statistical Analysis & Computer Services GPD Gross Primary Deficit
DGBA Department of Government and Bank Accounts G-Sec Government Securities
DGCI&S Directorate General of Commercial Intelligence and GST Goods and Service Tax
Statistics GSTP Global System of Trade Preferences
DI Direct Investment HDFC Housing Development Finance Corporation
DICGC Deposit Insurance and Credit Guarantee Corporation of HFT Held For Trading
India HICP Harmonised Index of Consumer Prices
DID Discharge of Internal Debt HO Head Office
DMA Departmentalized Ministries Account HUDCO Housing & Urban Development Corporation
DRI Differential Rate of Interest Scheme IAAS Indian Audit and Accounts Service
DSBB Dissemination Standards Bulletin Board IADF International Agricultural Development Fund
DVP Delivery versus Payment IATT Inland Air Travel Tax
ECB External Commercial Borrowing IBRD International Bank Reconstruction and Development
ECB European Central Bank IBS International Banking Statistics
ECGC Export Credit and Guarantee Corporation IBSA India Brazil and South Africa
ECS Electronic Clearing Scheme ICAR Indian Council of Agricultural Research
EDMU External Debt Management Unit ICICI Industrial Credit and Investment Corporation of India
EEA Exchange Equalization Account ICMR Indian Council of Medical Research
EEC European Economic Community IDA International Development Association
EEFC Exchange Earners Foreign Currency IDB India Development Bonds
EET Exempt Exempt Taxation IDBI Industrial Development Bank of India
EFF Extended Fund Facility IDD Industrial Development Department
EFR Exchange Fluctuation Reserve IDFC Infrastructure Development Finance Corporation
EMI Equated Monthly Instalment IFAD International Fund for Agricultural Development
EMU Economic and Monetary Union IFC International Finance Corporation
EMS European Monetary System IFC(W) International Finance Corporation (Washington)
EPF Employees Provident Fund IFCI Industrial Finance Corporation of India
ERM Exchange Rate Mechanism IFR Investment Fluctuation Reserve
ETF Exchange Traded Fund IFS International Financial Statistics
EU European Union IFSC Indian Financial System Code
EUR Euro IGLS Iterative Generalized Least Squares
EXIM Bank Export Import Bank of India IIBI Industrial Investment Bank of India
FC Finance Commission IIP Index of Industrial Production
FCCB Foreign Currency Convertible Bond IIP/InIP International Investment Position
FCNR(B) Foreign Currency Currency Non-Repatriable(Banks) IMD India Millennium Deposits
FCNRA Foreign Currency Non-Repatriable Account IMF International Monetary Fund
FDI Foreign Direct Investment INR Indian Rupee
FDR Fixed Deposit Receipt IOTT Input-Output Transaction Table
FEMA Foreign Exchange Management Act IP Interest Payment
FERA Foreign Exchange Regulations Act IPO Initial Public Offer
FI Financial Institution IPR Intellectual Property Right
FICCI Federation of Indian Chambers of Commerce and IRB I Industrial Reconstruction Bank of India
Industry IRDA Insurance Regulatory Development Authority
FIIs Foreign Institutional Investors IRS Indian Revenue Service
FIPB Foreign Investment Promotion Board (of India) ISDA International Swaps and Derivative Association
FIMMDA Fixed Income Money Market and Derivatives Association ISIC International Standard Industrial Classification
of India ISO International Standards Organization
FISIM Financial Intermediation Services Indirectly Measured ITRS International Transaction Reporting System
FPI Flow Of Funds ITO International Trade Organisation; Income-tax Officer
FPSB Financial Planning Standards Boards (India) IWGEDS International Working Group on External Debt Statistics
FRA Foreign Portfolio Investment JNNURM Jawahar Lal Nehru National Urban Renewal Mission
FRBM Fiscal Responsibility and Budget Management Act KPO Knowledge Process Outsourcing
FSDC Financial Stability & Development Council KVIC Khadi & Village Industries Corporation
FTA Free Trade Area KYC Know Your Customer
FWG First Working Group on Money LAF Liquidity Adjustment Facility
FX Foreign Exchange LAMPS Large-sized Adivasi Multipurpose Societies
GATS General Agreement on Trade in Services LAS Loan & Advances by States
GATT General Agreement on Tariffs and Trade LBD Land Development Bank
GCA General Currency Area LBS Locational Banking Statistics
GCC Gulf Cooperation Council LDC Least Developed Countries
GDP Gross Domestic Product LERMS Liberalised Exchange Rate Management System
GDR Global Depository Receipt LIC Life Insurance Corporation of India

65
LT Long Term OMO Open Market Operations
LTO Long Term Operation OPEC Organisation of Petroleum Exporting Countries
M1 Narrow Money OSCB Other Indian Scheduled Commercial Bank
M3 Broad Money PAC Public Accounts Committee
MA Moving Average PACER Programme for Acceleration of Commercial Energy
MAT Minimum Alternative Tax Research
MCA Ministry of Company Affairs PACF Partial Auto-Correlation Function
MEP Minimum Export Price PACS Primary Agriculture Credit Societies
MF Mutual Fund PAN Permanent Account Number (of Income-Tax)
MFN Most Favoured Nation PCARDB Primary Cooperative Agriculture and Rural Development
MIGA Multilateral Investment Guarantee Agency Bank
MIS Management Information System PD Primary Deficit
MMSE Minimum Mean Squared Errors PDAI Primary Dealers Association of India
MNC Multi-national Corporation PDO Public Debt Office
MoF Ministry of Finance PDO-NDS Public Debt Office-cum-Negotiated Dealing System
MOF Master Office File PDs Primary Dealers
MRM Monitoring and Review Mechanism PES Public Enterprises Survey
MRP Maximum Retail Price PF Provident Fund
MSS Market Stabilisation Scheme PIO Persons of Indian Origin
MT Mail Transfer PN Participatory Note
MTM Mark-To-Market PNB Punjab National bank
MRTPC Monopolies and Restrictive Trade Practices Commission POP Point of Purchase
MRTS Mass Rapid Transit System POS Point-Of-Sale
NABARD National Bank for Agriculture and Rural Development PRB Primary Revenue Balance
NAC(LTO) National Agricultural Credit (Long Term Operatiion) PSE Public Sector Enterprises
NAFTA North America Free Trade Agreement PUC Paid Up Capital
NAIO Non Administratively Independent Office PWD Public Works Department
NAMA Non-Agriculture Market Access QR Quantitative Restriction
NAS National Account Statistics QRR Quick Review Report
NASDAQ National Association of Securities Dealers Automated RBI Reserve Bank of India
Quotation RD Revenue Deficit
NASSCOM National Association of Software and Services RDBMS Relational Database Management System
Companies RE Revenue Expenditure
NATO North Atlantic Treaty Organisation REC Rural Electrification Corporation
NAV Net Asset Value REER Real Effective Exchange Rate
NBC Non-Banking Companies RFC Residents Foreign Currency
NBFC Non Banking Financial Companies RIB Resurgent India Bonds
NEC Not Elsewhere Classified RIDF Rural Infrastructure Development Fund
NEDB North-Eastern Development Bank RLA Recoveries of Loans & Advances
NEER Nominal Effective Exchange Rate RLC Repayment of Loans to Centre
NFA Non-Foreign Exchange Assets RMB Renminbi (Chinese)
NFD Net Fiscal Deficit RNBC Residuary Non-Banking Companies
NFO New Fund Offers RO Regional Office
NGO Non-Governmental Organization RoCs Registrars of Companies
NHB National Housing Bank RPA Rupee Payment Area
NIC National Industrial Classification RPCD Rural Planning and Credit Department of RBI
NIF Note Issuance Facility RR Revenue Receipts
NNML Net Non-Monetary Liabilities RRBs Regional Rural Banks
NPA Non-Performing Assets RRPI Rural Retail Price Index
NPD Net Primary Deficit RTP Reserve Tranche Position
NPRB Net Primary Revenue Balance RTGS Real Time Gross Settlement System
NPV Net Present Value RUF Revolving Underwriting Facility
NRBI National Rural Bank of India RWA Risk Weighted Asset
SARFASI Securitization & Reconstruction of Finacial Assets &
NRE Non-Resident External Enforcement of Security
NRG Non-Resident Government SAFTA South Asian Free Trade Area
NRI Non-Resident Indian SAARC South Asian Association for Regional Co-operation
NSC National Statistical Commission SAPTA SAARC Preferential Trading Agreement
NSE National Stock Exchange SAM Social Accounting Matrix
NSSF National Small Savings Fund SAS Statistical Analysis System
NSDL National Securities Depository Limited SBI State Bank of India
OBU Offshore Banking Unit SCARDB State Cooperative Agriculture and Rural Development
OD Over Draft Bank
ODA Official Development Assistance SCB State Cooperative Bank
OECD Organisation for Economic Cooperation and SCB Scheduled Commercial Bank
Development SCS Size Class Strata
OECO Organisaton for Economic Co-operation SCO Shanghai Cooperation Organisation
OFI Other Financial Institutions SCOPE Standing Conference on Public Enterprises
OLTAS OnLine Tax Accounting System SDDS Special Data Dissemination Standards

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SDR Special Drawing Right
SEBI Securities and Exchange Board of India
SEBs State Electricity Boards
SFC State Financial Corporation
SGL Subsidiary General Ledger
SGSY Swarnajayanthi Gram Swarrojgar Yojana
SHGs Self-Help Groups
SIDBI Small Industries Development Bank of India
SIDC State Industrial Development Corporation
SI-SPA Systems Improvement Scheme under Special Project
Agriculture
SJSRY Swarna Jayanti Shahari Rojgar Yojana
SLR Statutory Liquidity Ratio
SLRS Scheme for Liberation & Rehabilitation of Scavangers
SMG Standing Monitoring Group
SNA System of National Accounts
SRWTO Small road & Water Transport Operators
SSI Small-Scale Industries
SSSBEs Small Scale Service & Business Enterprises
STT Securities Transaction Tax
SWG Second Working Group on Money Supply
SWIFT Society for Worldwide Interbank Financial
Telecommunications
TBs Treasury Bills
TC Temporary Change
TDS Tax Deduction at Source
TDSAT Telecom Disputes Settlement Appellate Tribunal
TIN Tax Information Network
TINXSYS Tax Information Exchange System
TRAI Telecom Regulatory Authority of India
TRIMs Trade Related Investment Measures
TRIPS Trade Related Intellectual Property Rights
TT Telegraphic Transfer
UBB Uniform Balance Book
UBD Urban Banks Department
UCB Urban Cooperative Bank
UCN Uniform Code Number
ULIP Unit Linked Insurance Policy
UNCTAD United Nations Conference on Trade and Development
UNDP United Nations Development Programme
UNIDO United Nations Industrial Development Organisation
USD US Dollars
USE United Stock Exchange
UTI Unit Trust of India
VAT Value Added Tax
VC Venture Capital
WEF World Economic Forum
WFTU World Federation of Trade Unions
WIPO World Intellectual Property Organisation
WPI Wholesale Price Index
WSS Weekly Statistical Supplement
WTO World Trade Organisation
YTM Yield to Maturity
ZO Zonal Office

Chapter-7
INTERNATIONAL FINANCIAL ORGANISATIONS
IMF is an international monetary organisation. It was established on
December 27, 1945 in Washington on the recommendations of
Bretton Woods Conference. But it started its operation on March 1,
1947. At present 188 nations are members of the IMF. South Sudan
became the newest member in April 2012. In place of Dominique
Strauss-Kahn, Christine Lagarde has been made as new Managing
Director of IMF on July 5, 2011. She is serving as 11th MD of IMF.
Objective of IMF
According to Article of Agreement of the IMF, its main objectives are
as follows:
INTERNATIONAL MONETARY FUND
1. To promote international monetary co-operation
2. To ensure balanced international trade.
3. To ensure exchange rate stability.
4. To eliminate or to minimize exchange restrictions by promoting the
system of multilateral payments.
5. To grant economic assistance to member countries for eliminating
the adverse imbalance in balance payments.
6. To minimize imbalance in quantum and duration of international
trade.

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Constitution, Membership and Capital of IMF
IMF is controlled and managed by a board of Governors.
Each member country nominates a Governor. All the nominated
Governors make a board of governors. Each country also nominates
an alternate Governor who casts his vote in absence of the Governor.
Each Governor is allotted a number of votes which is determined by
the quota allotted to respective country in the capital of IMF. Each
Governor has got the right of 250 votes on the basis of membership
and one additional vote for each SDR 1,00,000 of quota.
The additional of these two types of votes becomes the
actual voting right of the member country. For example, India's voting
right is 250 + 30555 = 30805 because India's quota is SDR 30555 lakh.
It clearly indicates that the voting right depends on the quantum of
quota of a particular country with IMF. This is the reason why the rich
and industrialised countries got the higher voting rights due to their
higher quotas with the IMF.
The main source of IMF resources is the quota allotted to the member
countries. Till 1971, all the amounts of quotas and the assistance
provided were denominated in US dollar, but since December 1971, all
the quotas and transactions are expressed in SDR (Special Drawing
Right) which is also known as Paper Gold.
In 1971, one SDR was assumed equivalent to 1 dollar but
due to subsequent decline in dollar value SDR 1 became equivalent to
$1.585 by the end of April 1995. Since January 1, 1981 the value of
SDR is being determined by the basket of currency of 5 largest
exporting member countries: US dollar, Deutsche Mark, Yen, Franc,
and Pound Sterling.
In 1991, the weight to these 5 currencies in SDR price
determination was as follows:
American Dollar 40%
German Franc 21%
Japanese Yen 17%
British Pond 11%
French Franc 11%
The currency value of SDR is determined by the IMF each
day by summarising the value in US dollars, based on the market
exchange rates of a basket of fine currencies.
The IMF's financial year is from 1 May to 30 April. IMF lends
to various member countries in the form of various facilities (Extended
Fund Facility, Standby Facility, Contingent Credit Lines, Compensatory
Facility etc.) designed to serve specific purpose, but essentially aimed
at balance of payments stabilization or meeting the emergent foreign
exchange needs. The poor countries are also helped by funding from
Poverty Reduction and Growth Facility. As on June 2004, the IMF was
lending to 13 members in the form of standby facility, to two
members under Extended Arrangements and 38 poor countries under
poverty Reduction and Growth Facility. The quota allotted by the IMF
to each member has to be deposited partly in their own currency and
remainder in form of foreign exchange.

India's 11th Place in IMF General Quota

After the review of IMF's General Quota, India's quota has been raised
Country Quota
to 582.15 crore SDR from the existing level of 415.82 crore SDR. (at the
time of increase time 1 SDR = $ 1.54 = Rs 69.48). This quota hike has USA 17.09%
raised India's vote share from 1.91% to 2.44%. Japan 6.13%
India has been placed at 11th place in IMF's General Quota. USA Germany 5.99%
remains in biggest quota holder despite its quota share coming down UK 4.94%
to 17.09%. France 4.94%
China 3.72%
Italy 3.25%
Saudi Arabia 3.21%
Canada 2.93%
Russia 2.74%
India 2.44%

India and IMF

IMF has played an important role in Indian economy. IMF has provided In July India and IMF joint training program at the National Institution
economic assistance from time to time to India and has also provided of Bank Management, Pune was established. The training program will
appropriate consultancy in determination of various policies in the provide policy oriented training in economics and related operational
country. India is the founder member of IMF. The finance minster is fields to Indian officials and officials of countries in South Asia and East
ex-officio governor in IMF board of Governors. Till 1970, India was Africa. The first training program was held during July 2006. The RBI is
among the first five nation highest quota with IMF and due to this a nodal body to co-ordinate the training program with the IMF.
status India was allotted a permanent Place in executive Board of Enhanced Structural Adjustment Facility (ESAF) was established in
Directors. 1987 with an amount of SDR 6 billion to help the low income countries
India participates in FTP of the IMF from 2002. 43 countries, including with heavy debt burdens in difficult external environment and
India now participate in FTP. By participation in FTP India is allowing implement comprehensive macro-economic and structural policy
IMF to encash its rupee holding as a part of our quota contribution for program aiming at strengthening their balance of payments position
hard currency which is then lent to other member countries who are and fostering growth. India contributes as donations to Subsidy
debtors to the IMF. From 2002 to Feb 2006, India has made purchases Account and made a commitment to provide grant contribution to the
transactions of SDRs 493.23 million and four repurchase transaction extent of US $ 1 million per year over 15 years for a total of US $ 15
amounting to SDRs 466.474 million. million.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT (IBRD) – WORLD BANK

IBRD and its associate institutions forms a group known as
the World Bank. The Second World War damaged economies of the
most of the countries particularly of those who were directly involved
in the war. The global war had completely dislocated the multilateral
trade and dislocated multilateral trade and had caused massive
destruction of life and property. In 1945, it was realized to
concentrate on reconstructing these war affected economies in a
planned way.
IBRD was established in December 1945 with the IMF on
the basis of recommendation of Bretton Wood Conference. This is the
reason why IMF and IBRD are called 'Bretton Wood Twins'. IBRD
started functioning in June 1946. World Bank and IMF are
complementary institutions.
India is a member of four constituents of the World Bank
Group i.e. IBRD, IDA, IFC, and MIGA (Multilateral Investment
Guarantee Agency) but not of its fifth institute ICSID (International
Centre for the Settlement of Investment Disputes).
Objective of World Bank

68
According to the Clause I of the agreement made at the time of authorized capital of the bank has been increased from time to time
establishment of World Bank, it was assigned the following objectives: with the approval of member countries. On June 30, 1996 the
1. To provide long-run capital to member countries for economic authorized capital of the bank was $ 188 billion out of which $ 180.6
reconstruction and development. World Bank provides capital mainly billion (96% of total authorized capital) was issued to member country
for following purposes – in the form of shares. Member countries repay the share amount to
(i) To rehabilitate war ruined economies (this objective is the World Bank in following ways:
fully achieved) 1. Two percent of allotted shares are repaid in Gold, USD or SDR.
(ii) To finance productive efforts according to peace time 2. Every member country is free to repay 18% of its capital share in its
requirement. own currency.
(iii) To develop resources and production facilities in 3. The remaining 80% share is deposited by member country only on
underdeveloped countries. demand by the World Bank.
2. To induce long-run capital investment for assuring BOP equilibrium Bank is managed by an elected President. On July 1, 2007,
and balanced development of international trade. (This objective was Robert B. Zoellick became the 11th President of the World Bank. The
adopted to increase the productivity of member countries and to headquarter of World Bank is at Washington DC.
improve economic condition and standard of living among them). IDA (established on September 24, 1960) and IFC
3. To promote capital investment in member countries in following (established in July, 1956) are the tow main associate institutions of
ways: IBRD. These institutions work under the supervision of World Bank.
(i) To provide guarantee on private loans and capital MIGA is also an associate institution in the World Bank group.
investment.
(ii) If private capital is not available even after providing Banks Lending Operations
guarantee, then IBRD provides loans for productive IBRD gives loan to members in anyone or more of the following ways:
activities in considered conditions. 1. By granting or participating in direct loans but its own
4. To provide guarantee for loans granted to small and large units and funds.
other projects of member countries. 2. By granting loans out of the fund raised in the market of a
5. To ensure the implementation of development projects so as to member or otherwise borrowed by the bans.
bring about a smooth transference from a war-time to peace 3. By guaranteeing the whole or part loans made by private
economy. investors through the investment channels. Before a lone is made or
guaranteed the bank ensure that the –
IMF Vs. World Bank 1. Project for which the loan is asked has been carefully
IMF and World Bank are Bretton Wood Twins. Both the institutions examined by the competent committee as regards the
were established to promote international economic cooperation but merits of the proposal.
a basic difference is found in the nature of economic assistance given 2. Borrower has reasonable prospect for the repayment of
by these two institutions. World Bank provides long term loans for loans.
balanced economic development, while IMF provides short-term loans 3. The loan is meant for productive purposes.
to member countries for eliminating BOP disequilibrium. Both these 4. The loan is meant for reconstruction and development.
institutions are complementary to each other. The eminent world
economist George Schultz had suggested in American Economic Functions of the World Bank
Association Conference in January 1995, for the merger of IMF and Presently, The World Bank is playing the main role of providing loans
World Bank. for development works to member countries, especially to under-
developed countries. The World Bank provides long-term loans for
Membership of the World Bank and Voting Right various development projects of 5 to 20 years duration. The loaning
Generally every member country of the IMF automatically becomes system of the bank can be explained with the help of following points:
member of World Bank. Similarly, any country which quit IMF 1. Bank can grant loans to a member country upto 20% of its
automatically expelled from the World Bank's membership. But under share in paid up capital.
a certain provision a country leaving the membership of IMF can 2. Bank also provides loan to private investors belonging to
continue its membership with World Bank. If 75% member of the bank member countries on its own guarantee, but for this loan
gives their vote in its favour. private investors have to seek prior permission from those
Any member country can be debarred from the membership of World countries where the amount will be collected. For such loans
Bank on following grounds: the consent of that country is also required whose currency
1. Any member country can quit the bank simply by written is given in loans. For granting such guarantee, the Bank
notice to bank, but such country has to repay the granted charges 1% to 2% as service charge.
loans on terms and conditions decided at the time of 3. The quantum of loans, interest rate and term and
sanctioning the loan. conditions are determined by the Bank itself.
2. Any country working against the guidelines of bank can be 4. Generally, Bank grants loan for a particular project duly
debarred from membership by the board of governors. submitted by the member country.
Like IMF, World Bank has also two types of members: 'founder 5. The debtor nation has to repay either in reserve
members' and 'general members' the world bank has 30 founder currencies or in the currency in which the loan was
members that attained membership by December 31, 1945. India is sanctioned.
also among these founder members. The countries joining the World Besides, granting loans for reconstruction and development, World
Bank after December 13, 1945 come under the category of general Bank also provides various technical services to the member countries.
members. At present total membership of the World Bank is 182. The For this purpose, the Bank has established 'The Economic
voting right of member country is determined on the basis of member Development Institute' and a Staff College in Washington.
country's share in the total capital of the bank. Each member has 240
votes plus one additional vote for each 1, 00,000 shares of the capital Appraisal of the World Bank Activities
stock held. Bank has sanctioned 75% of its total loans to developing countries of
Africa, Asia and Latin America while only 25% was given to developed
Capital Resources of World Bank nations of Europe. IFC, IDA and MIGA were established as the
The initial authorized capital of World Bank was $ 10,000 associate institutions of the World Bank in extending financial
million, which was divided in 1 lakh share of $ 1 lakh each. The assistance to member countries. Besides, the Bank also tried its best

69
to coordinate the functioning of nations granting loans to
underdeveloped countries.
In 1958, the Bank played an important role in establishing
'India Aid Club' for providing specific economic assistance to India. It
has now been renamed as 'India Development Forum'. Such type of
clubs and forums has also been established for other developing
countries. The Bank has also established its mission in various
developing countries for providing technical assistance for
development project in these countries. The Bank also takes the
guidance of experts of various international institutions like FAO,
WHO, UNIDO, UNESCO for providing assistance for various projects
related to agriculture, education and water supply.

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)

The International Fund for Agricultural Development (IFAD), a
specialized agency of the United Nations, was established as an
international financial institution in 1977 as one of the major
outcomes of the 1974 World Food Conference. IFAD is dedicated to
eradicating rural poverty in developing countries. Seventy-five% of the
world’s poor live in rural areas in developing countries, yet only 4% of
official development assistance goes to agriculture.
The strategic policy of IFAD is detailed in Strategic
Framework for IFAD 2011-2015: Enabling the Rural Poor to Overcome
Poverty. Its headquarters is in Rome and is a member of the United
Nations Development Group.
IFAD's goal is to empower poor rural women and men in
developing countries to achieve higher incomes and improved food
security.
Objectives
IFAD will ensure that poor rural people have better access to, and the
skills and organization they need to take advantage of:
 Natural resources, especially secure access to land and
water, and improved natural resource management and
conservation practices.
 Improved agricultural technologies and effective production
services.
 A broad range of financial services.
 Transparent and competitive markets for agricultural inputs
and produce.
 Opportunities for rural off-farm employment and enterprise
development.
 Local and national policy and programming processes.
India and IFAD
India is one of the original members of IFAD. IFAD’s strategy in India
centres on improving the access of rural sectors to economic and
social resources. By working in close partnership with the Government
of India and other donors, IFAD funds projects for rural development,
tribal development, women's empowerment, natural resources
management and rural finance. Since 1979, the organization has
financed 21 programmes and projects, approving loans for a total of
approximately US$564.4 million.
IFAD assistance for Maharashtra Rural Credit Project - (SDR 17.77 M)
The IFAD assisted MRCP was under implementation since January
1994 in 12 districts of Maharashtra. The project implementation came
to an end on 31 March 2002. It covered 1483 villages in 12 districts of
Maharashtra through 677 branches of 8 commercial banks, 7 DCCBs
and 5 RRBs. The IFAD funded nearly 60% of the total project outlay of
US $ 48.4 million by way of soft loan to Government of India (GoI). The
balance amount was funded by GoI, Government of Maharashtra and
the participating banks.
The project resulted in uplifting nearly 78000 individuals
above the poverty line. The number of SHGs formed in the project
area crossed 9000 mark with 90% of SHGs being exclusively women
groups. Nearly 8000 SHGs were linked to banks. There were 1483
Village Development Councils functioning as Peoples' Representative
Bodies in the project villages. The project made a positive impact not
only on the living conditions of the rural poor in the project area but
also brought about a change in the attitude among bankers and
Government functionaries at grass root level. The amount of loan
sanctioned for the project was SDR 15.24 million.

INTERNATIONAL DEVELOPMENT ASSOCIATION (IDA)

The International Development Association (IDA), is the part of the
World that helps the world’s poorest countries. It complements the
World Bank's other lending arm — the International Bank for
Reconstruction and Development (IBRD) — which serves middle-
income countries with capital investment and advisory services.
IDA was created on September 24, 1960 and is responsible
for providing long-term, interest-free loans to the world's 78 poorest
countries, 39 of which are in Africa. IDA provides grants and credits
(subject to general conditions with repayment periods of 35 to 40
years. Since its inception, IDA credits and grants have totaled $161
billion, averaging $7–$9 billion a year in recent years and directing the
largest share, about 50%, to Africa. While the IBRD raises most of its
funds on the world's financial markets, IDA is funded largely by
contributions from the governments of the richer member countries.
Additional funds come from IBRD income and repayment of IDA
credits.
IDA loans address primary education, basic health services,
clean water supply and sanitation, environmental safeguards,
business-climate improvements, infrastructure and institutional
reforms. These projects are intended to pave the way toward
economic growth, job creation, higher incomes and better living
conditions. Membership
International Development Association member states
Members of the IDA are 170 of the UN members and Kosovo. Non-
membersare: Andorra, Antigua and Barbuda, Bahrain, Belarus, Brunei,
Bulgaria, Cook Islands,Cuba, Jamaica, Liechtenstein, Malta,
Monaco,Namibia, Nauru, Niue, North Korea, Qatar, Romania, San
Marino, Seychelles, Suriname, Turkmenistan,Uganda, Uruguay,
Vatican City and Venezuela. The remaining non-members are states
with limited recognition.

IDA Borrowings
Eligibility for IDA support depends first and foremost on a country’s levels, but are also creditworthy for some IBRD borrowing. They are
relative poverty, defined as GNI per capita below an established referred to as “blend” countries. Eighty one countries are currently
threshold and updated annually (in fiscal year 2012: US$1,175). eligible to receive IDA resources. Together, these countries are home
IDA also supports some countries, including several small island to 2.5 billion people, half of the total population of the developing
economies, which are above the operational cut-off but lack the world. An estimated 1.5 billion people there survive on incomes of
creditworthiness needed to borrow from IBRD. Some countries, such US$2 or less a day.
as India and Pakistan, are IDA-eligible based on per capita income

FY11 Top Ten IDA Borrowers

($million, excludes regional projects)
Bangladesh 2,139 India 2,072

70
 Pakistan 1,292 Nigeria 535
Vietnam 1,280 Kenya 490
Ethiopia 630 Tanzania 420
Ghana 605 Mozambique 41

New IDA Lending by Region: IDA Lending by Sector:

Sub-Saharan Africa..............43% Infrastructure ....................42%
South Asia..........................39% Public Admin and Law.........23%
East Asia/Pacific..................10% Social sector.......................20%
Europe/Central Asia.............4% Agriculture ..........................8%
Latin America/Caribbean......3% Industry ..............................6%
Middle East/North Africa......1% Finance................................1%

INDIA AND IDA

India has become the second largest borrower from the International Development Association (IDA), the soft loan affiliate of the World Bank,
which helps the world’s poorest countries, with a total borrowing, of$2,072 million in the fiscal year ended June 2011.

INTERNATIONAL FINANCE CORPORATION (IFC)

The International Finance Corporation (IFC) promotes sustainable
private sector investment in developing countries.
IFC is a member of the World Bank Group and is headquartered in
Washington, United States. Established in 1956, IFC is the largest
multilateral source of loan and equity financing for private sector
projects in the developing world. It promotes sustainable private
sector development primarily by:
1. Financing private sector projects and companies located in the
developing world.
2. Helping private companies in the developing world mobilize
financing in international financial markets.
Providing advice and technical assistance to businesses and
governments.
Objectives
1. To provide loans to private sector.
2. To co-ordinate capital and management.
3. to induce capitalist countries to invest in developing countries.
Members of the IFC
Members of the IFC are 184 countries. Non-members are:
Andorra, Antigua and Barbuda, Bahrain, Belarus, Brunei, Bulgaria,
Cook Islands, Cuba, Jamaica, Liechtenstein, Malta, Monaco, Namibia,
Nauru, Niue, North Korea, Qatar, Romania, San Marino, Seychelles,
Suriname, Turkmenistan, Uganda, Uruguay, Vatican City and
Venezuela.
The remaining non members are states with limited recognition
India and IFC
The International Finance Corporation (IFC), the private-investment
arm of the World Bank Group, and the Microfinance Institutions
Network (MFIN), a self-regulatory organization of Indian microfinance
institutions, are working together to encourage microfinance
institutions to start reporting to the country’s Credit Information
Bureau, which is intended to promote responsible lending. While the
Reserve Bank of India (RBI) has mandated that all non-banking finance
companies and microfinance institutions (MFIs) report to the credit
bureaus, it reported that most MFIs have not yet adopted the
practice.

GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT)

During great depression of 1930s the international trade was badly
affected and various countries impose import restrictions for
safeguarding their economies. This resulted in a sharp decline in the
world trade. In 1945, USA put forward many proposals for extending
international trade an employment. On October 30, 1947, 23
countries at Geneva, signed an agreement related to tariffs imposed
on trade. This agreement is known as General Agreement on Tariffs
and Trade (GATT). It came into force on January 1, 1948. Initially GATT
was established in the form of a temporary arrangement but later on
it took the shape of a permanent agreement. GATTs headquarter was
in Geneva.
On December 12, 1995, GATT was abolished and replaced by World
Trade Organisation (WTO) which came into existence on January 1,
1995.
Objectives of GATT
1. To provide equal opportunities to all countries in international
market for trading purpose without any favour.
2. To increase the effective demand for real income growth and
goods.
3. To minimize tariffs and other restrictions on trade for ensuring
mutual benefits and to eliminate favours from international trade.
4. To provide amicable solution to the disputes related to
international trade by giving co-operation and advices to member
countries.
5. To ensure a better living standards in the world as a whole.

GATT Rounds
Round Year Venue Issues and Outcomes
I 1947 Geneva (Switzerland) Signature on first GATT agreement Tariff
II 1949 Anesi (France) reductions on specific products Tariff reductions
on specific products Induction of European
III 1950- 51 Torquay(England) community for the first time and 20% tariff
IV 1956 Geneva reduction 33% reduction in restrictions on
V (Dillion Round) 1960- 61 Geneva manufactured goods Non-tariff restrictions, etc.
Agriculture, Service, TRIPS, TRIMS related issues.
VI (Kenedy Round) 1964- 67 Geneva
VII (Tokyo Round) 1973- 79 Geneva
VIII(Uruguay Round) 1986- 93 Punta Del Este
(Beginning in Uruguay and closing at
Geneva)

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The Uruguay round of GATT (1986-93) gave birth to World Trade
Organisation. The members of the GATT signed on an agreement of
Uruguay round in April 1994 in Morocco for establishing a new
organization named WTO. It was officially constituted on January 1,
1995 which took place of GATT as an effective formal organization.
GATT was an informal organization which regulated world trade since
1948. Like GATT, WTO’s headquarter is also in Geneva. Contrary o the
temporary nature of GATT, WTO is a permanent organization which
has been established on the basis of an international treaty approved
by participating countries.
It achieved the international status like IMF and IBRD but it
is not an agency of the UNO. WTO has a General Council for its
administration, which includes one permanent representative of each
member nation. Generally, it has one meeting per month which is held
at Geneva. The highest authority of policy making is WTO’s Ministerial
Conference which is held after every 2 years.
The present strength of WTO membership is 157. This
includes China & Nepal whose accession was approved by the WTO
Ministerial conferences held in Doha & Cancun in November 2001 and
Sept. 2003 respectively. There are presently 30 countries in the
process of accession to the WTO. WTO is headed by Pasacal Lamy.
There are number of important committees for
administration of WTO, out of which, 2 committees play the pivotal
role in WTO.
They are:
1. Dispute Settlement Body – DSB - DSB considers the complaints of
members countries against violation of rules by any member country.
This body appoints a group of experts to investigate into such
complaints. This body meets twice a month for such cases.
2. Trade Policy Review Body – TPRB - TPRB reviews the trade policy of
member countries. The trade policy of all big trade powers of the
World are reviewed after every 2 years. All the members of WTO are
the members of TPRB
Other important bodies of WTO are:
1. Council for Trade in Goods
2. Council for Trade in Services
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT (UNCTAD)
UNO declared 1960-70 as Development Decade. In 1961 UNO
attempted to increase the income of developing countries with a
growth rate of 5% p.a. during that development decade. In July 1962,
a conference of developing countries was held at Cairo which resolved
to convene a World Conference for this purpose. Economic and Social
Council of the UNO organized a World Trade and Development
Conference from March 31, 1964 to June 16, 1964. A worldwide
international trade policy was determined in this conference. Various
issues related to extension of international trade of developing
Objectives of UNCTAD
1. To promote international trade especially with a view to
accelerating the economic development of underdeveloped countries.
2. To determine policies and principles for international trade and
economic development.
ADB was established in Dec. 1966 on the recommendations of ECAFE
(Economic commission for Asia and Far East). The aim of this Bank is
to accelerate economic and social development in Asia and Pacific
region. The Bank started its functioning on January 1, 1967. the head
office of the Bank is located at Manila, Philippines. It is worth-
mentioning here that the Chairmanship ADB is always allotted to
Japanese while its 3 Deputy Chairmen belong to USA, Europe and Asia.
Principal functions of ADB
The principal functions of ADB are:
1. To make loans and equity investments for the economic and social advancement of its developing member countries.
WORLD TRADE ORGANISATION (WTO)
3. Council for Trade related aspects of Intellectual Property Rights
Objectives of WTO
1. To improve standard of living of people in member countries.
2. To ensure full employment and broad increase in effective demand.
3. To enlarge production and trade of goods.
4. To enlarge production and trade of service.
5. To ensure optimum utilization of world resources.
6. To accept the concept of sustainable development.
7. To protect environment.
Functions of WTO
1. To provide facilities for implementation, administration and
operation of multilateral and bilateral agreements of the world trade.
2. To provide a platform to member countries to decide future
strategies related to trade and tariff.
3. To administer the rules and processes related to dispute
settlement.
4. To implement rule and provisions related to trade policy review
mechanism.
5. To assist IMF and IBRD for establishing coherence in universal
economic policy determination.
6. To ensure the optimum use of world resources.
ROUNDS OF GATT
Negotiations Between 1947 and the last year of GATT there were 8
rounds of negotiations between the participating countries. The first 6
rounds were related to curtailing tariff rates. 7 round included the
non-tariff obstacles. The 8 round was entirely different from the
previous rounds because it included a number of new subjects for
consideration. This 8 round known as ‘Uruguay Round’, which became
most controversial. The discussions at this round only gave birth to
World Trade Organisation (WTO).
countries were also discussed in that Conference. The Conference
came to be known as UNCTAD-I.
Presently, UNCTAD has become a permanent organization
for promoting international trade. Its headquarter is at Geneva
(Switzerland), Mr. Allec Irwin is its present Chairman. Generally,
UNCTAD has its session after every 4 years. IMF has got the
permanent representation in its all bodies. This is the reason why IMF
includes all UNCTAD proposals in its policies. UNCTAD
recommendations are only suggestions and no country can be
compelled to accept them.
3. To propose the strategy for implementing pre-approved principles
and policies.
4. To assist Economic and Social Council of the UNO. 5. To provide a
suitable platform for trade dialogues.
ASIAN DEVELOPMENT BANK (ADB)
From 31 members at its establishment in 1966, ADB has grown to
encompass 67 members of which 48 are form within the Asia and
Pacific region and 19 outside. Some member countries enter a new
phase in their relationship with ADB as defined under the
Classification and Graduation Policy.
Georgia is the 67 and newest member, having joined ADB effective
February 2, 2007.
2. To provide technical assistance for the preparation and execution of development projects and programs and advisory services.
3. To respond to the requests for assistance in coordinating development policies and plans in developing member countries.
4. To respond to the requests for assistance coordinating development policies and plans of developing member countries.
Asian Development Bank constituted ‘Asian Development Fund’ in 1974, which provides loans to Asian countries on concessional interest rate.
SOME IMPORTANT UN AGENCIES
Name of Headquarters Estd.In Agency Purpose
International Labour Organisation (ILO) 1919 Geneva To improve conditions and living standard of workers.
World Health Organisation (WHO) 1948 Geneva Attainment of highest possible level of health by all people.
United Nations Educational, 1946 Scientific 1946 Paris To promote collaboration among nations through education,
and Cultural Organisation (UNESCO) science and culture.
International Atomic Energy 1957 Agency 1957 Vienna To promote peaceful uses of atomic energy.
(IAEA)
United Nations International Children’s 1946 New York To promote children’s welfare all over the world.
Emergency Fund (UNICEF)
United Nations High Commissioner for 1950 Geneva To provide protection to refugees
Refugees (UNHCR)
United Nations Fund for 1967 Population 1967 New York For formulating population policies
Activities (UNFPA)
International Fund for Agricultural 1977 Rome For financing agricultural projects in the world to raise the economic
Development growth
United Nations Conference on Trade and 1964 Geneva Promotes international trade to accelerate economic growth of
Development (UNCTAD) developing countries.
International Civil Aviation Organisation 1947 Montreal Promotes safety of international aviation.
(ICAO)
International Monetary Fund (IMF) 1945 Washington Promotes international monetary cooperation.
DC
International Finance Corporation (IFC) 1956 Washington Promote economic development by encouraging private enterprise
DC in its member countries.
Universal Postal Union (UPU) 1947 Berne Improve various postal services in the world.
United. Nations Environmental Programme 1972 Nairobi Promotes international cooperation in human environment.
(UNEP)
United Nations Industrial Development 1967 Geneva Sets international regulations for radio, telegraph, and telephone
Organisation (UNIDO) and space radio communication.
Food and Agricultural Organisation (FAO) 1945 Rome To improve living condition of rural population.
International Bank for Reconstruction and 1945 Washington Development of economies of members by facilitating investment
Development (IBRD) D.C. of capitals by providing loans.
World Meteorological Organisation (WMO) 1950 Geneva Promote international exchange of weather reports.
World Trade Organisation (WTO) 1995 Geneva Setting rules for world trade to reduce tariffs.

United Nations Development Programme New York Help deneloping countries increase the wealth producing
(UNDP) capabilities of their natural and human resources.
Inter Government Maritime Consultative 1958 London Promotes co-operation on technical matters of maritime safety,
Organisation (IMCO) navigation and encourages antipollution measures.
International Development Association 1960 Washington An affiliate of the World Bank, aims to help underdeveloped
(IDA) D.C. countries raise living standards.
International Telecommunication Union 1947 Geneva Sets international regulations for radio telegraph, telephone and
(ITU) space radio communications.
United Nations Institute for Training and 1965 New York Provides training and research to help facilitate UN objectives of
Research (UNITAR) world peace and security and of economic and social progress.
United Nations Relief and Work for 1949 New York Provides basic amenities and education for the victims of Arab-Israel
Palestine Refugees (UNRWA) War
United Nations Fund For Population 1967 New York Studying population dynamics, collecting population data,
Activities (UNFPA) formulating and evolving population policies, family planning and
related programmes.

Chapter-8
BASEL
BASEL COMMITTEE ON BANKING SUPERVISION (BCBS)
The Basel Committee is a committee of bank supervisors drawn from 13 member countries (Belgium, Canada, France, Germany, Italy, Japan,
Luxembourg, The Netherlands, Spain, Sweden, Switzerland, United Kingdom and United State of America). It was founded in 1974 to ensure
international cooperation among a number of supervisory authorities. It usually meets at the Bank for International settlements in Basel,
Switzerland, its permanent Secretariat. The Committee framed two Capital Accords, Basel I (1988) and Basel II (1999).
The differences in these Accords are as follows:
Basel I Basel II
Only Credit Risk (Although included capital for market Credit, Market and Operational Risk
risk subsequently in 1996)
Credit Risk: One measure fits all – Broad brush Based on Underlying Risk
approach

73
Single Risk Measure: Minimum Capital Requirement Package of Minimum Capital Requirement, Supervisory Review Process and Market
Discipline working complementary to each other

Basel II
Basel II is the second of the Basel Accords, (now extended and (2) Supervisory review and
effectively superseded by Basel III), which are recommendations on (3) Market discipline
banking laws and regulations issued by the Basel Committee on The Basel I accord dealt with only parts of each of these pillars. For
Banking Supervision. example: with respect to the first Basel II pillar, only one risk, credit
Basel II uses a "three pillars" concept – risk, was dealt with in a simple manner while market risk was an
(1) Minimum capital requirements (addressing risk) afterthought; operational risk was not dealt with at all.

BASEL-III
BASEL III is a global regulatory standard on bank capital adequacy, creditworthiness and of bonds, financial bundles and various other
stress testing and market liquidity risk agreed upon by the members of financial instruments were conducted without supervision by official
the Basel Committee on Banking Supervision in 2010-11. agencies, leading to AAA ratings on mortgage-backed securities, credit
This, the third of the Basel Accords was developed in default swaps and other instruments that proved in practice to be
response to the deficiencies in financial regulation revealed by the extremely bad credit risks. In Basel III a more formal scenario analysis
late-2000s financial crisis. Basel III strengthens bank capital is applied (three official scenarios from regulators, with ratings
requirements and introduces new regulatory requirements on agencies and firms urged to apply more extreme ones).
liquidity and bank leverage. The OECD estimates that the implementation of Basel III will
For instance, the change in the calculation of loan risk in decrease annual GDP growth by 0.05 to 0.15 percentage point.
Basel II which some consider a causal factor in the credit bubble prior Outside the banking industry itself, criticism was muted. Bank
to the 2007-8 collapse: in Basel II one of the principal factors of directors would be required to know market liquidity conditions for
financial risk management was out-sourced to companies that were major asset holdings, to strengthen accountability for any major losses
not subject to supervision: credit rating agencies. Ratings of

Overview
Basel III will require banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of risk-
weighted assets (RWA). Basel III also introduces additional capital buffers-
(i) a mandatory capital conservation buffer of 2.5% and
(ii) a discretionary countercyclical buffer, which allows national regulators to require up to another 2.5% of capital during periods of high credit
growth.
In addition, Basel III introduces a minimum 3% leverage ratio and two required liquidity ratios. The Liquidity Coverage Ratio requires a bank to
hold sufficient high-quality liquid assets to cover its total net cash outflows over 30 days; the Net Stable Funding Ratio requires the available
amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress.

SUMMARY OF PROPOSED CHANGES

 First, the quality, consistency, and transparency of the capital
base will be raised.
 Tier 1 capital: the predominant form of Tier 1 capital must be
common shares and retained earnings.
 Tier 2 capital instruments will be harmonized.
 Tier 3 capital will be eliminated.
 Second, the risk coverage of the capital framework will be
strengthened.
 Promote more integrated management of market and
counterparty credit risk.
 Add the CVA (credit valuation adjustment)-risk due to
deterioration in counterparty's credit rating.
 Strengthen the capital requirements for counterparty credit
exposures arising from banks’ derivatives, repo and financing
transactions.
 Raise the capital buffers backing these exposures.
 Reduce procyclicality.
 Provide additional incentives to move OTC derivative contracts
to central counterparties (probably clearing houses).
 Provide incentives to strengthen the risk management of
counterparty credit exposures.
 Raise counterparty credit risk management standards by
including wrong-way risk.
 Third, the Committee will introduce a leverage ratio as a
supplementary measure to the Basel II risk-based framework.
 The Committee therefore is introducing a leverage ratio
requirement that is intended to achieve the following objectives:
o Put a floor under the build-up of leverage in the
banking sector
o Introduce additional safeguards against model risk and
measurement error by supplementing the risk based
measure with a simpler measure that is based on gross
exposures
 Fourth, the Committee is introducing a series of measures to
promote the buildup of capital buffers in good times that can be
drawn upon in periods of stress ("Reducing procyclicality and
promoting countercyclical buffers").
 The Committee is introducing a series of measures to address
procyclicality:
o Dampen any excess cyclicality of the minimum capital
requirement
o Promote more forward looking provisions
o Conserve capital to build buffers at individual banks
and the banking sector that can be used in stress
 Achieve the broader macro prudential goal of protecting the
banking sector from periods of excess credit growth.
o Requirement to use long term data horizons to
estimate probabilities of default.
o downturn loss-given-default estimates, recommended
in Basel II, to become mandatory.
o Improved calibration of the risk functions, which
convert loss estimates into regulatory capital
requirements.
o Banks must conduct stress tests that include widening
credit spreads in recessionary scenarios.
 Promoting stronger provisioning practices (forward looking
provisioning):
o Advocating a change in the accounting standards
towards an expected loss (EL) approach.
 Fifth, the Committee is introducing a global minimum liquidity
standard for internationally active banks that includes a 30-day
liquidity coverage ratio requirement underpinned by a

74
 longerterm structural liquidity ratio called the Net Stable
Funding Ratio. (In January 2012, the oversight panel of the Basel
Committee on Banking Supervision issued a statement saying
that regulators will allow banks to dip below their required
liquidity levels, the liquidity coverage ratio, during periods of
stress.
 The Committee also is reviewing the need for additional capital,
liquidity or other supervisory measures to reduce the
externalities created by systemically important institutions. As
on Sept 2010, Proposed Basel III norms ask for ratios as: 7-
9.5%(4.5% +2.5%(conservation buffer) + 0-2.5%(seasonal
buffer)) for Common equity and 8.5-11% for tier 1 cap and 10.5
to 13 for total capital.

MAJOR HIGHLIGHTS OF THE DRAFT GUIDELINES OF RBI

The major highlights of the draft guidelines of RBI are:
Minimum Capital Requirements
 Common Equity Tier 1 (CET1) capital must be at least 5.5% of riskweighted assets (RWAs)
 Tier 1 capital must be at least 7% of RWAs
 Total capital must be at least 9% of RWAs
Capital Conservation Buffer
 The capital conservation buffer in the form of Common Equity of 2.5% of RWAs.
Transitional Arrangements
 It is proposed that the implementation period of minimum capital requirements and deductions from Common Equity will begin
from January 1, 2013 and be fully implemented as on March 31, 2017.
 Capital conservation buffer requirement is proposed to be implemented between March 31, 2014 and March 31, 2017.
 The implementation schedule indicated above will be finalized taking into account the feedback received on these guidelines.
 Instruments which no longer qualify as regulatory capital instruments will be phased-out during the period beginning from January 1,
2013 to March 31, 2022.

Chapter-9
BANKING FACTS
FACTS RELATED TO BANKING SYSTEM IN INDIA & FINANCE SECTOR
1. Scheduled Banks in India constitute those banks which have been
included in the Second Schedule of Reserve Bank of India(RBI) Act,
1934. RBI in turn includes only those banks in this schedule which
satisfy the criteria laid down vide section 42 (6) (a) of the Act.
Nonscheduled bank in India" means a banking company as defined in
clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of
1949), which is not a scheduled bank".
2. The first bank in India to be given an ISO Certification -Canara Bank
3. The first bank in Northern India to get ISO 9002 certification for
their selected branches -Punjab and Sind Bank
4. The first Indian bank to have been started solely with Indian
capital -Punjab National Bank
5. The first among the private sector banks in Kerala to become a
scheduled bank in 1946 under the RBI Act -South Indian Bank
6. India's oldest, largest and most successful commercial bank,
offering the widest possible range of domestic, international and NRI
products and services, through its vast network in India and overseas
-State Bank of India
7. India's second largest private sector bank and is now the largest
scheduled commercial bank in India -The Federal Bank Limited
8. Bank which started as private shareholders banks, mostly
Europeans shareholders -Imperial Bank of India
9. The first Indian bank to open a branch outside India in London in
1946 and the first to open a branch in continental Europe at Paris in
1974 -Bank of India, founded in 1906 in Mumbai
10. The oldest Public Sector Bank in India having branches all over
India and serving the customers for the last 132 years -Allahabad
Bank
11. The first Indian commercial bank which was wholly owned and
managed by Indians -Central Bank of India
12. Bank of India was founded in 1906 in Mumbai. It became the first
Indian bank to open a branch outside India in London in 1946 and the
first to open a branch in continental Europe at Paris in 1974.
13. Use of which notes is to be treated as terror act-Fake Notes
14. Bank which launched Premium Credit cards Exclusively for
Women recently- HDFC Bank
15. India’s largest private lender by assets, ICICI Bank and IDBI Bank,
the seventh largest public sector bank in India together launched
India’s first- Credit Default Swap (CDS)
16. Bank which recently became insolvent and RBI cancels
licenseBharat Urban Co-operative Bank
17. Private Sector Bank that recently launched a product of personal
loan called ‘Swift’ – HDFC
18. The bank, which approved $500 mn loan to help India Improve
rail services-Asian Development Bank
19. The Reserve Bank of India was nationalised in the year- 1949
20. FDI limit in New Banks- 49% (for 1 Five years)
21. FDI limit in Pvt. Banks- 74%.
22. Banking Ombudsman will not entertain credit card complaints
older than - 12 months
23. The largest public sector bank – SBI
24. India’s largest private sector bank – ICICI Bank
25. The largest foreign bank working in India - Standard Chartered
Bank
26. Asian Development Bank was established in – December 1966
27. The first Swadeshi Bank in India is- PNB
28. The Structure of RBI is – 1 Governor and 4 Deputy Governors
29. NABARD was established in – July 1982
30. Head Office of World Bank is in- Washington D.C.
31. Spanish bank to setup a representative office in India to help
Spanish companies to tap into the fast growing Indian
economyCaixabank
32. The increased interest rate for savings in Post office in India is- 4%
33. Bank which become the 1st lender to raise funds in offshore Yuan
in China- IDBI
34. Bank which abolished penalty on pre-payment of housing loans
recently- SBI
35. The bank which has launched MobileBank Accounts in association
with Vodafone's m-paisa- HDFC Bank
36. Stock exchange launched operations on NSE to become the only
stock exchange in India to offer facility to trade on 3 trading
platforms - BSE, NSE & CSE with a single membership- Calcutta Stock
Exchange
37. The bill that was approved by the Union Cabinet to improve
efficiency and increase accountability of the corporate
sectorCompanies Bill, 2011
38. Who has launched the world's first Islamic finance benchmark
rateThomson Reuters
39. Two Japanese stock exchanges which are set to merge and create
world's No.3 exchange- Tokyo Stock Exchange and Osaka Securities
Exchange Co. Ltd.

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40. According to the Banking Laws Bill, 2011, which was tabled in Lok
Sabha recently, under which organization merger and acquisitions (M
& A) in banking sector be regulated – RBI
41. Minimum limit on the transaction of money through RTGS is-
2lakhs
42. Maximum limit on the transaction of money through RTGS is- No
Limit
43. Minimum & Maximum limit on the transaction of money through
NEFT is- NO LIMIT
44. The shares offered through IPO route should get listed in stock
exchanges within 12 days.
45. Major Credit rating agencies in India are CRISL, ICRA, CARE, FITCH
India; and major international agencies are Standard & Poors (S&P),
Moody’s and FITCH. These agencies in India are regulated by SEBI.
46. Saving Banks Interest rates, Fixed Deposit interest rates, Loan
rates etc are decided by individual banks.
47. CRR, SLR, Rep, Reverse Repo. MSF are decided by RBI.
48. Teaser Loan or Teaser rates are related to Home Loans where
interest rates are firstly low and increases later.
49. Tool in the hands of RBI to control the inflationary pressure in the
country – Monetary Policy. Legal Tender Money in India
includesCoins and currency notes
50. India’s First Financial Archive has been set up at— Kolkata
51. The International Bank for Reconstruction and Development
(IBRD) is better known as- World Bank
52. The Reserve Bank of India was established under the act- RBI Act
1934
53. The largest commercial bank in India- State Bank of India
54. The Bank of Calcutta, Bank of Bombay and Bank of Madras were
merged in 1921 to form- Imperial Bank of India
55. The sister organization of the World Bank helps private activity in
developing countries by financing projects with long-term capital in
the form of equity and loans is- International Finance Corporation
56. The sister organization of the World Bank provides long term
loans at zero interest to the poorest developing countries -
International Developmental Association
57. The ‘Father of Economics’is - Adam Smith
58. The first Indian Bank to introduce credit card - Central Bank of
India
59. Devaluation of a currency mean- Decrease in the external value of
money
60. Cards known as plastic money - Credit cards
61. Open Market Operations" are carried out by- RBI
62. Capital Market Regulator is – SEBI
63. Final Guidelines New Banking Licence

Eligibility
1. Corporates, NBFCs and public sector entities can set up banks.
Broking and real estate companies can also apply.
2. Promoters need to be financially sound with track record of 10
years.
3. Positive feedback from other regulators and investigative agencies
critical.
BANKING REQUIREMENTS
3. Foreign shareholding capped at 49% for 5 years.
Capital Requirements
1. Minimum paid-up capital of the bank must be Rs 500 crore.
2. The bank needs to maintain capital adequacy ratio at 13% for initial
3 years.
3. The bank must get listed within 3 years.

Structure Other conditions

1. Promoters must set up banks through wholly-owned non-
operative financial holding companies.
2. Holding company and bank not permitted to lend or invest in any
entity belonging to the promoter group.
3. Shares of holding companies cannot be transferred to entities
outside the promoter group.
Shareholding
1. Holding company to hold 40% stake in bank for 5 years.
2. Holding company to reduce stake in the bank to 20% in 10 years,
15% in 12 years.
1. At least 25% of new branches must be in unbanked rural centres.
2. At least 50% of the directors of holding company must be
independent directors.
3. The bank's board must have a majority of independent directors.
Application process
1. Applications for banking licences need to be submitted by July 1,
2013.
2. RBI to issue in-principle approval after considering
recommendations from a high level advisory committee.
3. The in-principle approval will be valid for 1 year.

Chapter-10
2-GA-L10
LIST OF STATES AND TERRITORIES
STATES
Map Name Date of formation Official Administrative Largest city Literacy
[26]
language(s) capital (if not the Rate
capital) (%)
1 Andhra Pradesh 1 November 1956 Telugu Hyderabad Visakhapatnam 67.41%
2 Arunachal Pradesh 20 February 1987 English Itanagar 66.95
3 Assam 26 January 1950 Assamese,Bengali, Bodo Dispur Guwahati 73.18
4 Bihar 26 January 1950 Hindi, Bhojpuri,Magadhi, Patna 63.82
Maithili, Urdu
5 Chhattisgarh 1 November 2000 Chattisgarhi,Hindi Raipur (interim) 71.04
6 Goa 30 May 1987 Konkani Panaji 87.40
7 Gujarat 1 May 1960 Gujarati, Hindi Gandhinagar Ahmedabad 79.31
8 Haryana 1 November 1966 Hindi, Punjabi Chandigarh Faridabad 76.64
(shared, Union
Territory)
9 Himachal Pradesh 25 January 1971 Hindi Shimla 83.78
10 Jammu and Kashmir 26 January 1957 Dogri, Kashmiri,Ladakhi, Srinagar (summer 68.74
[29]
Urdu )
Jammu (winter)

76
 11 Jharkhand 15 November 2000 Hindi Ranchi Jamshedpur 67.63
12 Karnataka 26 January 1950 Kannada Bangalore 75.60
(As Mysore State)
13 Kerala 1 November 1956 Malayalam Thiruvananthapur 93.91
am
14 Madhya Pradesh 1 November 1956 Hindi Bhopal Indore 70.63
15 Maharashtra 26 January 1950 Marathi Mumbai 82.91
(AsBombay State)
16 Manipur 21 January 1972 Manipuri Imphal 79.85
17 Meghalaya 21 January 1972 English, Garo,Hindi, Khasi, Shillong 75.48
Pnar
18 Mizoram 20 February 1987 Mizo Aizawl 91.58
19 Nagaland 1 December 1963 English Kohima Dimapur 80.11
[30]
20 Odisha 26 January 1950 Oriya Bhubaneswar 73.45
21 Punjab 26 January 1950 Punjabi Chandigarh Ludhiana 76.68
(shared, Union
Territory)
22 Rajasthan 26 January 1950 Hindi Jaipur 67.06
23 Sikkim 16 May 1975 Nepali, Bhutia,Gurung, Le Gangtok 82.20
pcha,Limbu, Manggar,Ne
wari, Sherpa,Sunwar, Ta
mang
24 Tamil Nadu 26 January 1950 Tamil Chennai 80.33
(As Madras State)
Note 1 [
25 Telangana 2 June 2014 Telugu, Urdu Hyderabad 66.50%
32]

26 Tripura 21 January 1972 Bengali, Tripuri Agartala 87.75

27 Uttar Pradesh 26 January 1950 Hindi, Urdu Lucknow Kanpur 69.72
28 Uttarakhand 9 November 2000 Hindi, Sanskrit Dehradun (interi 79.63
m)
29 West Bengal 26 January 1950 Bengali, English,Nepali Kolkata 77.08
Note 1 Andhra Pradesh was divided into two states, Telangana and a residual Andhra Pradesh on 2 June 2014. Hyderabad, located entirely
within the borders of Telangana, is to serve as joint capital for both states for a period of time not exceeding ten years.
UNION TERRITORIES
Map Name Official language Capital Literacy Rate(%)
A Andaman and Nicobar Islands English, Hindi Port Blair 86.27
B Chandigarh English, Hindi, Punjabi Chandigarh 86.43
C Dadra and Nagar Haveli English, Gujarati, HindiMarathi Silvassa 77.65
D Daman and Diu English, Gujarati, Hindi,Marathi Daman 87.07
E Lakshadweep English, Malayalam Kavaratti 92.28
F National Capital Territory of Delhi English, Hindi, Punjabi,Urdu New Delhi 86.34
[39]
G Puducherry Malayalam, Tamil,Telugu Pondicherry 86.55

CHIEF MINISTERS AND GOVERNORS

1. State Chief Minister Governor
2. Andhra Pradesh Shri. Nara Chandrababu Naidu Shri E.S Lakshmi Narasimhan
3. Arunachal Pradesh Shri Nabam Tuki Lt. General (Retd.) Nirbhay Sharma
4. Assam Shri Tarun Gogoi Shri Padmanabha Balakrishna Acharya (Add.Charge)
5. Bihar Shri Nitish Kumar Shri Keshari Nath Tripathi (Add. Charge)
6. Chhattisgarh Dr. Raman Singh Shri Balramji Dass Tandon
7. Delhi (NCT) Shri Arvind Kejriwal
8. Goa Shri Laxmikant Parsekar Smt. Mridula Sinha
9. Gujarat Smt. Anandiben Patel Shri Om Prakash Kohli
10. Haryana Shri Manohar Lal Prof. Kaptan Singh Solanki
11. Himachal Pradesh Shri Virbhadra Singh Shri Kalyan Singh (Add. Charge)
12. Jammu and Kashmir Shri Mufti Mohammad Sayeed Shri N. N. Vohra
13. Jharkhand Shri Raghubar Das Dr. Syed Ahmed
14. Karnataka Shri Siddaramaiah Shri Vajubhai Vala
15. Kerala Mr Oommen Chandy Shri Justice (Retd.) Palaniswamy Sathasivam
16. Madhya Pradesh Shri Shivraj Singh Chouhan Shri Ram Naresh Yadav
17. Maharashtra Shri Devendra Fadnavis Shri Chennamaneni Vidyasagar Rao
18. Manipur Shri Okram Ibobi Singh Dr. Krishan Kant Paul (Add. Charge)
19. Meghalaya Dr. Mukul Sangma Shri Keshari Nath Tripathi (Add. Charge)
20. Mizoram Shri Lal Thanhawla Dr. Aziz Qureshi
21. Nagaland Shri. T R Zeliang Shri Padmanabha Balakrishna Acharya

77
 22. Odisha Shri Naveen Patnaik Dr. S. C. Jamir
23. Puducherry (UT) Shri N. Rangasamy
24. Punjab Shri Parkash Singh Badal Shri Kaptan Singh Solanki
25. Rajasthan Smt. Vasundhara Raje Shri Kalyan Singh
26. Sikkim Shri Pawan Kumar Chamling Shriniwas Dadasaheb Patil
27. Tamil Nadu Thiru O.Panneerselvam Dr. K. Rosaiah
28. Tripura Shri Manik Sarkar Shri Padmanabha Balakrishna Acharya (Add.Charge)
29. Uttar Pradesh Shri Akhilesh Yadav Shri Ram Naik
30. Uttarakhand Shri Harish Rawat Dr. Krishan Kant Paul
31. West Bengal Km. Mamata Banerjee Shri Keshari Nath Tripathi

LT. GOVERNORS & ADMINISTRATORS

Union Territory Lt. Governor/Administrator
Andaman and Nicobar Island (UT) Lt. General A.K. Singh (Retd.), PVSM, AVSM, SM, VSM (Lieutenant Governor)
Chandigarh (UT) Prof. Kaptan Singh Solanki (Administrator)
Dadra and Nagar Haveli (UT) Shri Ashish Kundra, IAS (Administrator)
Daman and Diu (UT) Shri Ashish Kundra, IAS (Administrator)
Delhi (NCT) Shri Najeeb Jung (Lieutenant Governor)
Lakshadweep (UT) Shri H. Rajesh Prasad, IAS (Administrator)
Puducherry (UT) Lt. General A.K. Singh (Retd.), PVSM, AVSM, SM, VSM (Lieutenant Governor)

MEMBERS OF PARLIAMENT

RAJYA SABHA
The Rajya Sabha should consist of not more than 250 members - 238 members representing the States and Union Territories, and 12 members
nominated by the President. Rajya Sabha is a permanent body and is not subject to dissolution. However, one third of the members retire
every second year, and are replaced by newly elected members. Each member is elected for a term of six years. The Vice President of India is
the ex-officio Chairman of Rajya Sabha. The House also elects a Deputy Chairman from among its members. Besides, there is also a panel of
"Vice Chairmen" in the Rajya Sabha. The senior most minister, who is a member of Rajya Sabha, is appointed by the Prime Minister as Leader
of the House.
LOK SABHA
The Lok Sabha is composed of representatives of people chosen by direct election on the basis of Universal Adult Suffrage. Maximum strength
of the House is 552 members - 530 members to represent the States, 20 members to represent the Union Territories, and 2 members to be
nominated by the President from the Anglo-Indian Community. At present, the strength of the House is 545. The term of the Lok Sabha, unless
dissolved, is five years from the date appointed for its first meeting. However, while a proclamation of emergency is in operation, this period
may be extended by Parliament by law for a period not exceeding one year at a time and not extending in any case, beyond a period of six
months after the proclamation has ceased to operate.
CHIEFS OF ARMED FORCES
 Chief of the Air Staff: Air Chief Marshal Arup Raha, PVSM, AVSM, VM, ADC
 Chief of the Army Staff: General Dalbir Singh Suhag, PVSM, UYSM, AVSM, VSM, ADC
 Chief of the Naval Staff: Admiral R K Dhowan, PVSM, AVSM, YSM, ADC
 Chief of the Integrated Defence Staff: Air Marshal PP Reddy, VM

CABINET MINISTERS
Portfolio Minister Took office Left office Party
Prime Minister Narendra Modi 26 May 2014 Incumbent BJP
Minister for Personnel, Public Grievances and Pensions
Department of Atomic Energy
Department of Space
All important policy issues and all other portfolios not
allocated to any Minister.
Minister of Home Affairs Rajnath Singh 26 May 2014 Incumbent BJP
Minister of External Affairs Sushma Swaraj 26 May 2014 Incumbent BJP
Minister of Overseas Indian Affairs
Minister of Finance Arun Jaitley 26 May 2014 Incumbent BJP
Minister of Defence Arun Jaitley 26 May 2014 9 November BJP
2014
Manohar Parrikar 9 November Incumbent BJP
2014
Minister of Information and Broadcasting Arun Jaitley 9 November Incumbent BJP
2014

78
Minister of Railways D. V. Sadananda Gowda 26 May 2014 9 November BJP
2014
Suresh Prabhu 9 November Incumbent BJP
2014
Minister of Urban Development Venkaiah Naidu 26 May 2014 Incumbent BJP
Minister of Housing and Urban Poverty Alleviation
Minister of Parliamentary Affairs
Minister of Road Transport and Highways Nitin Gadkari 26 May 2014 Incumbent BJP
Minister of Shipping
Minister of Law and Justice Ravi Shankar Prasad 26 May 2014 9 November BJP
2014
D.V. Sadananda Gowda 9 November Incumbent BJP
2014
Minister of Water Resources, River Development and Uma Bharati 26 May 2014 Incumbent BJP
Ganga Rejuvenation
Minister of Minority Affairs Najma Heptulla 26 May 2014 Incumbent BJP
[†]
Minister of Rural Development Gopinath Munde 26 May 2014 3 June 2014 BJP
[5]
Minister of Panchayati Raj Nitin Gadkari 4 June 2014 9 November BJP
Minister of Drinking Water and Sanitation 2014
[6]
Birender Singh 9 November Incumbent BJP
2014
Minister of Consumer Affairs, Food and Public Distribution Ram Vilas Paswan 26 May 2014 Incumbent LJP
Minister of Micro, Small and Medium Enterprises Kalraj Mishra 26 May 2014 Incumbent BJP
Minister of Women and Child Development Maneka Gandhi 26 May 2014 Incumbent BJP
Minister of Chemicals and Fertilizers Ananth Kumar 26 May 2014 Incumbent BJP
Minister of Communications and Information Technology Ravi Shankar Prasad 26 May 2014 Incumbent BJP
Minister of Civil Aviation Ashok Gajapathi Raju 26 May 2014 Incumbent TDP
Pusapati
Minister of Heavy Industries and Public Enterprises Anant Geete 26 May 2014 Incumbent Shiv
Sena
Minister of Food Processing Industries Harsimrat Kaur Badal 26 May 2014 Incumbent SAD
Minister of Mines Narendra Singh Tomar 26 May 2014 Incumbent BJP
Minister of Steel
Minister of Labour and Employment Narendra Singh Tomar 26 May 2014 9 November BJP
2014
Bandaru Dattatreya 9 November Incumbent BJP
2014
Minister of Tribal Affairs Jual Oram 26 May 2014 Incumbent BJP
Minister of Agriculture Radha Mohan Singh 26 May 2014 Incumbent BJP
Minister of Social Justice and Empowerment Thawar Chand Gehlot 26 May 2014 Incumbent BJP
Minister of Human Resource Development Smriti Irani 26 May 2014 Incumbent BJP
Minister of Science and Technology Harsh Vardhan 9 November Incumbent BJP
2014
Minister Of Health and Family Welfare Harsh Vardhan 4 June 2014 9 November BJP
2014
[7]
Jagat Prakash Nadda 9 November Incumbent BJP
2014
MINISTERS OF STATE
Bandaru Dattatraya Labour and Employment*
Dharmendra Pradhan Petroleum and Natural Gas*
G. M. Siddeshwara Heavy Industries & Public Enterprises
Giriraj Singh Micro, Small & Medium Enterprises
Hansraj Gangaram Ahir Chemicals & Fertilizers
Jayant Sinha Finance
Jitendra Singh Development of North Eastern Region*, Prime Minister's Office, Personnel, Public Grievances & Pensions,
Department of Atomic Energy, Department of Space ; this links to the wrong Jitendra Singh(INC) instead of Jitendra
Singh(BJP)
Kiren Rijiju Home Affairs
Krishan Pal Social Justice & Empowerment
Nihalchand Panchayati Raj
Nirmala Sitharaman Commerce and Industry*
Mahesh Sharma Culture*, Tourism*, Civil Aviation
Manoj Sinha Railways
Mansukhbhai Tribal Affairs
Dhanjibhai Vasava
Mohanbhai Agriculture
Kalyanjibhai Kundariya
Mukhtar Abbas Naqvi Minority Affairs, Parliamentary Affairs
Prakash Javadekar Environment, Forest and Climate Change,Minister of Information and Broadcasting

79
Piyush Goyal Power*, Coal*, New and Renewable Energy*
Pon Radhakrishnan Road Transport & Highways, Shipping
Rajiv Pratap Rudy Skill Development & Entrepreneurship*, Parliamentary Affairs
Rajyavardhan Singh Information & Broadcasting
Rathore
Ram Kripal Yadav Drinking Water & Sanitation
Ram Shankar Katheria Human Resource Development
Rao Inderjit Singh Planning*, Defence
Raosaheb Dadarao Consumer Affairs, Food and Public Distribution
Danve
Sadhvi Niranjan Jyoti Food Processing Industries
Sanjeev Kumar Balyan Agriculture
Santosh Gangwar Textiles*
Sanwar Lal Jat Water Resources, River Development & Ganga Rejuvenation
Sarbananda Sonowal Youth Affairs and Sports*
Shripad Yasso Naik AAYUSH*, Health & Family Welfare
Sudarshan Bhagat Rural Development
Babul Supriyo Urban Development, Housing and Urban Poverty Alleviation
Upendra Kushwaha Human Resource Development
Vijay Kumar Singh Statistics and Programme Implementation*, External Affairs, Overseas Indian Affairs
Vijay Sampla Social Justice & Empowerment
Vishnu Deo Sai Mines, Steel
Y. S. Chowdary Science and Technology, Earth Science

HEADS OF IMPORTANT NATIONAL & INTERNATIONAL ORGANISATION

CONSTITUTIONAL OFFICES
Office Name Since
President of India Pranab Mukherjee 25 July 2012
Vice President of India / Chairman of the Rajya Sabha Mohammad Hamid Ansari 11 August 2007
Chief Justice of India H. L. Dattu 28 September 2014

POLITICAL OFFICES
Office Name Since
Prime Minister of India Narendra Damodardas Modi 26 May 2014
Speaker of the Lok Sabha Sumitra Mahajan 6 June 2014

POLITICAL OFFICIAL
Office Name
Minister of Defence Manohar Parrikar
Minister of External Affairs Sushma Swaraj
Minister of Finance Arun Jaitley
Minister of Home Affairs Rajnath Singh
Minister of Agriculture Radha Mohan Singh
Minister of Human Resource Development (India) Smriti Irani
Minister of Railways Suresh Prabhu
Minister of Law and Justice D. V. Sadananda Gowda

HEADS OF GOVT APEX WING

No Office Name
1 Chief Election Commissioner of India Nasim Zaidi
2 Chairperson, National Human Rights Commission Justice K. G. Balakrishnan
3 Chief Commissioner, Central Information Commission Position is Vacant
4 Chairman, National Commission for Minorities Shri Naseem Ahmad
5 Chairman, National Commission for SC P. L. Punia
6 Chairman, National Commission for ST Rameshwar Oraon
7 Chairperson, National Commission for Women Lalitha Kumaramangalam
8 Chairman, Atomic Energy Commission Ratan Kumar Sinha
9 Chairman, ISRO A S Kiran Kumar
10 Chairman, Union Public Service Commission Deepak Gupta
11 Chairman, National Knowledge Commission Sam Pitroda
12 Chairman, University Grants Commission Ved Prakash
13 Chairman, Central Water Commission of India Ashwin B. Pandya
14 Space Applications Center, Administrator(Director) Tapan Misra

HEADS OF FINANCIAL BODIES

Office Name Portrait Since

80
Chairman, 14th Finance Commission of India Y.Venugopal Reddy 3 January 2013
Governor of Reserve Bank of India Raghuram Rajan 4 September 2013
Chairman, Securities and Exchange Board of India (SEBI) Upendra Kumar Sinha 18 February 2011
Chairman, Insurance Regulatory and Development Authority of India T. S. Vijayan 23 February 2013
Chairman, 7th Pay Commission Ashok Kumar Mathur 04 February 2014
Chairman, SIDBI Kshatrapati Shivaji February

BUREAUCRATS
No Office Name
1 Cabinet Secretary of India Ajit Seth
2 National Security Adviser Ajit Kumar Doval
3 Secretary-General of the Rajya Sabha Shumsher K. Sheriff
4 Secretary-General of the Lok Sabha Anoop Mishra
5 Attorney General of India Mukul Rohatgi
6 Comptroller and Auditor General of India Shashi Kant Sharma
7 Solicitor General of India Ranjit Kumar
8 Principal Scientific Adviser R. Chidambaram
9 Permanent Representative of India to the United Nations Asoke Kumar Mukerji
10 Chairman, Railway Board AK Mittal
11 Foreign Secretary Subrahmanyam Jaishankar
11 Union Home Secretary LC Goyal
12 Finance Secretary Rajiv Mehrishi

DEFENCE AND SECURITY

No Office Name
1 Chief of Army Staff General Dalbir Singh Suhag
2 Chief of Air Staff Air Chief Marshal Arup Raha
3 Chief of Naval Staff Admiral Robin K Dhowan
4 Chief of Integrated Defence Staff Air Marshal PP Reddy
5 Director General, Border Security Force D K PATHAK
6 Director General, Central Reserve Police Force Prakash Mishra
7 Director General, Central Industrial Security Force Arvind Ranjan
8 Director-General of Military Intelligence Lt. Gen K G Krishna
9 Director, Central Bureau of Investigation ANIL KUMAR Sinha
10 Director, Intelligence Bureau Dineshwar Sharma
11 Director General, National Investigation Agency Sharad Kumar
12 Secretary (Research) Rajinder Khanna
13 Member (Investigation CBDT) Anita Kapur
14 Director General of ITBP Krishna Chaudhary

COUNTRIES AND THEIR CAPITAL & CURRENCY

Africa
Name Capital Currency Official language
1. Algeria Algiers Dinar Arabic
2. Angola Luanda Kwanza Portuguese
3. Benin Porto-Novo (official) Cotonou (seat CFA franc French
of government)
4. Botswana Gaborone Pula English Setswana
5. Burkina Faso Ouagadougou CFA franc French
6. Burundi Bujumbura Burundian franc Kirundi French
7. Cameroon Yaoundé CFA franc French English
8. Cape Verde Praia Cape Verdean escudo Portuguese
9. Central African Republic Bangui CFA franc French Sango
10. Chad N'Djamena CFA franc French Arabic
11. Comoros Moroni Comorian franc Comorian Arabic French
12. Congo (Congo-Brazzaville) Brazzaville CFA franc French
13. Côte d'Ivoire (Ivory Coast) Yamoussoukro (official) CFA franc French
Abidjan (seat of government)
14. Democratic Republic of the Kinshasa Congolese franc French
Congo (Congo-Kinshasa)
15. Djibouti Djibouti Djiboutian franc French Arabic
16. Egypt Cairo Egyptian pound Arabic
17. Equatorial Guinea Malabo Equatorial Guinean peseta Spanish French Portuguese
18. Eritrea Asmara Tallero Tigrinya Arabic English
19. Ethiopia Addis Ababa Birr Amharic
20. Gabon Libreville CFA franc French

81
21. Gambia Banjul Gambian dalasi English
22. Ghana Accra Ghana cedi English
23. Guinea Conakry Guinean franc French
24. Guinea-Bissau Bissau CFA franc Portuguese
25. Kenya Nairobi Kenyan shilling Swahili English
26. Lesotho Maseru Lesotho loti English Sesotho
27. Liberia Monrovia Liberian dollar English
28. Libya Tripoli Dinar Arabic
29. Madagascar Antananarivo Malagasy ariary Malagasy French
30. Malawi Lilongwe Kwacha English Chichewa
31. Mali Bamako CFA franc French
32. Mauritania Nouakchott Ouguiya Arabic
33. Mauritius Port Louis Mauritian rupee Mauritian Creole French
English
34. Mayotte Mamoudzou Overseas department Euro French
of France
35. Morocco Rabat Moroccan dirham Arabic Berber
36. Mozambique Maputo Mozambican metical Portuguese
37. Namibia Windhoek Namibian dollar English
38. Niger Niamey CFA franc French
39. Nigeria Abuja Naira English
40. Réunion Saint-Denis Euro French
Overseas department of France
41. Rwanda Kigali Rwandan franc Kinyarwanda English
French
42. Saint Helena, Ascension and Tristan Jamestown (Saint Helena) Saint Helena pound English
da Cunha Georgetown (Ascension Island) Pound sterling
Edinburgh of the Seven Seas (Tristan
da Cunha)
43. Sao Tome and Principe São Tomé Dobra Portuguese
44. Senegal Dakar CFA franc French
45. Seychelles Victoria Seychellois rupee Seychellois Creole French
English
46. Sierra Leone Freetown Leone English
47. Somalia Mogadishu Somali shilling Somali
Arabic
48. Somaliland Hargeisa Somaliland shilling Somali
Arabic
49. South Africa Pretoria (administrative/executive) South African rand Afrikaans English
Cape Town (legislative) Southern Ndebele
Bloemfontein (judicial) Northern Sotho
Southern Sotho Swazi
Tsonga Tswana Venda
Xhosa Zulu
50. South Sudan Juba South Sudanese pound English
51. Sudan Khartoum Sudanese pound Arabic English
52. Swaziland Mbabane (administrative) Lilangeni English Swati
Lobamba (royal and legislative)
53. Tanzania Dodoma (official) Tanzanian shilling Swahili English
Dar es Salaam (seat of government)
54. Togo Lomé CFA franc French
55. Tunisia Tunis Tunisian dinar Arabic
56. Uganda Kampala Ugandan shilling Swahili English Luganda
57. Western Sahara None Disputed territory Moroccan dirham See respective claimants
between Morocco and the Algerian dinar
Sahrawi Arab Democratic Mauritanian ouguiya
Republic
58. Zambia Lusaka Zambian kwacha English
59. Zimbabwe Harare various English Shona Sindebele

Asia
Name Capital Currency Official language
1. Afghanistan Kabul Afghani Pashto Dari (Persian)
2. Akrotiri and Dhekelia Episkopi Cantonment Euro English Greek
3. Armenia Yerevan Dram Armenian
[Europe]
4. Azerbaijan Baku Manat Azerbaijani
5. Bahrain Manama Bahraini dinar Arabic
6. Bangladesh Dhaka Taka Bengali
7. Bhutan Thimphu Bhutanese ngultrum Dzongkha

82
 Diego Garcia
8. British Indian Ocean Territory US dollar UK pound English
Overseas territory of the United Kingdom
9. Brunei Bandar Seri Begawan Brunei dollar Bahasa Melayu
10. Cambodia Phnom Penh Riel Khmer
11. China Beijing Renminbi (yuan) Standard Chinese
Flying Fish Cove
12. Christmas Island Australian dollar English
External territory of Australia
West Island English
13. Cocos (Keeling) Islands Australian dollar
External territory of Australia Tagalog
[Europe] Greek
14. Cyprus Nicosia Euro
Turkish
Portuguese
15. East Timor (Timor-Leste) Dili US Dollar
Tetum
[Europe]
16. Georgia Tbilisi Lari Georgian
English
17. Hong Kong Special administrative region of China Hong Kong dollar
Cantonese
Hindi
18. India New Delhi Rupee
English
19. Indonesia Jakarta Rupiah Indonesian
20. Iran Tehran Rial Persian
Kurdish
21. Iraq Baghdad Iraqi dinar
Arabic
Jerusalem (seat of government, proclaimed Hebrew
22. Israel New Shekel
capital) Arabic
23. Japan Tokyo Yen Japanese
24. Jordan Amman Jordanian dinar Arabic
Kazakh
25. Kazakhstan Astana Tenge
Russian
26. Kurdistan Erbil Dinar Kurdish
27. Kuwait Kuwait City Kuwaiti dinar Arabic
Kyrgyz
28. Kyrgyzstan Bishkek Som
Russian
29. Laos Vientiane Kip Lao
30. Lebanon Beirut Lebanese pound Arabic
Portuguese
31. Macau Special administrative region of China Macanese pataca
Cantonese
Kuala Lumpur (official)
32. Malaysia Ringgit Malaysian
Putrajaya (seat of government)
33. Maldives Malé Maldivian rufiyaa Maldivian
34. Mongolia Ulaanbaatar Tögrög Mongolian
35. Myanmar (Burma) Naypyidaw Kyat Burmese
Stepanakert
De facto sovereign state lacking general
36. Nagorno-Karabakh international recognition Armenian dram Armenian
Recognized by United Nations as de jure part
ofAzerbaijan
37. Nepal Kathmandu Nepalese rupee Nepali
Nicosia
De facto sovereign state lacking general
38. Northern Cyprus international recognition Turkish lira Turkish
Recognized by United Nation as de jure part
ofCyprus
39. North Korea Pyongyang North Korean won Korean
40. Oman Muscat Rial Arabic
English
41. Pakistan Islamabad Pakistani Rupee
Urdu
Ramallah (West Bank seat of government)
Gaza (Gaza Strip seat of government)
42. Palestine East Jerusalem (capital) Israeli Shekel Arabic
State of Palestine (flag displayed) proclaimed
on territory
Filipino
43. Philippines Manila Philippine Peso
English
44. Qatar Doha Riyal Arabic
45. Saudi Arabia Riyadh Saudi riyal Arabic
English
Chinese
46. Singapore Singapore Singapore dollar
Malay
Tamil

83
47. South Korea Seoul South Korean won Korean
Sinhala
48. Sri Lanka Colombo Sri Lankan rupee
Tamil
49. Syria Damascus Syrian pound Arabic
Taipei
De facto sovereign state lacking general
50. Taiwan international recognition New Taiwan dollar Standard Chinese
Recognized by United Nations as part
of China.
51. Tajikistan Dushanbe Somoni Tajik
52. Thailand Bangkok Baht Thai
[Europe]
53. Turkey Ankara Turkish lira Turkish
54. Turkmenistan Ashgabat Turkmen new manat Turkmen
55. United Arab Emirates Abu Dhabi UAE dirham Arabic
Uzbekistan som
56. Uzbekistan Tashkent Uzbek
(O'zbekiston so'mi)
57. Vietnam Hanoi đồng Vietnamese
58. Yemen Sana'a Yemeni rial Arabic

Europe
Name Capital Currency Official language
1. Åland Islands Mariehamn Euro Swedish
Autonomous region of Finland (recognized by
international treaty)
2. Albania Tirana Lek Albanian
3. Andorra Andorra la Vella Euro Catalan
4. Austria Vienna Euro German
5. Belarus Minsk Belarusian ruble Belarusian
Russian
6. Belgium Brussels Euro Dutch French German
7. Bosnia and Herzegovina Sarajevo Convertible mark Bosnian Croatian Serbian
8. Bulgaria Sofia Lev Bulgarian
9. Croatia Zagreb Kuna Croatian
10. Czech Republic Prague Czech koruna Czech
[a]
11. Denmark Copenhagen Danish krone Danish
12. Estonia Tallinn Euro Estonian
13. Faroe Islands Tórshavn Faroese króna Faroese
Self-governing territory of the Danish Realm Danish
14. Finland Helsinki Euro Finnish Swedish
15. France Paris Euro French
CFP franc
16. Germany Berlin Euro German
17. Gibraltar Gibraltar Gibraltar pound English
Overseas territory of the United Kingdom
18. Greece Athens Euro Greek
19. Guernsey Saint Peter Port, British Crown dependency Pound sterling English French
20. Hungary Budapest Forint Hungarian
21. Iceland Reykjavík Icelandic króna Icelandic
22. Ireland Dublin Euro English
Irish
23. Isle of Man Douglas Pound sterling English
British Crown dependency Manx
24. Italy Rome Euro Italian
25. Jersey Saint Helier Pound sterling English
British Crown dependency French
26. Kosovo Pristina (De facto sovereign state recognized by Euro Albanian, Serbian
over 80 UN member states, A United
Nations mandate in Serbian territory was put in
place starting in 1999).
27. Latvia Riga Euro Latvian
28. Liechtenstein Vaduz Swiss franc German
29. Lithuania Vilnius Euro Lithuanian
30. Luxembourg Luxembourg Euro Luxembourgish French
German
31. Macedonia Skopje Macedonian denar Macedonian
32. Malta Valletta Euro Maltese English
33. Moldova Chişinău Moldovan leu Moldovan
34. Monaco Monaco Euro French
35. Montenegro Podgorica Euro Montenegrin

84
36. Netherlands Amsterdam Euro, US dollar, NA Dutch
guilder, Aruban florin
37. Norway Oslo Norwegian krone Norwegian, Bokmål, Nynorsk
38. Poland Warsaw Złoty Polish
39. Portugal Lisbon Euro Portuguese
40. Romania Bucharest Romanian leu Romanian
41. Russia Moscow Russian ruble Russian
27 others co-official
42. San Marino San Marino Euro Italian
43. Serbia Belgrade Serbian dinar Serbian
44. Slovakia Bratislava Euro Slovak
45. Slovenia Ljubljana Euro Slovene
46. Spain Madrid Euro Spanish, Catalan, Galician,
Basque
47. Svalbard Longyearbyen Special territory Norwegian krone Norwegian
of Norway (recognized by international treaty)
48. Sweden Stockholm Swedish krona Swedish
49. Switzerland Bern Swiss franc German, French, Italian,
Romansh
50. Transnistria Tiraspol Transnistrian ruble Russian, Moldovan, Ukrainian
De facto sovereign state lacking general
international recognition
Recognized by United Nations as de jure part
of Moldova
51. Ukraine Kiev Ukrainian hryvnia Ukrainian
52. United Kingdom London Pound sterling English
53. Vatican City Vatican City Euro Italian

North America
Name Capital Currency Official language
1. Anguilla The Valley, Overseas territory of the United Kingdom East Caribbean Dollar English
2. Antigua and Barbuda St. John's East Caribbean Dollar English
3. Aruba Oranjestad, Constituent country of the Kingdom of the Aruban florin Papiamento,
Netherlands Dutch
4. Bahamas Nassau Bahamian Dollar English
5. Barbados Bridgetown Barbadian Dollar English
6. Belize Belmopan Belize Dollar English
7. Bermuda Hamilton, Overseas territory of the United Kingdom Bermudian Dollar English
8. Bonaire Kralendijk, Special municipality of the Netherlands United States Dollar Dutch
9. British Virgin Islands Road Town, Overseas territory of the United Kingdom United States Dollar English
10. Canada Ottawa Canadian Dollar French, English
11. Cayman Islands George Town, Overseas territory of the United Cayman Islands Dollar English
Kingdom
12. Clipperton Island Uninhabited, Overseas territory of France Euro French
13. Costa Rica San José Costa Rican colon Spanish
14. Cuba Havana Cuban peso Spanish
15. Curaçao Willemstad, Constituent country of the Kingdom of the Netherlands Antillean guilder Papiamento
Netherlands Dutch
16. Dominica Roseau East Caribbean Dollar English
17. Dominican Republic Santo Domingo Dominican peso Spanish
18. El Salvador San Salvador United States Dollar Spanish
19. Greenland Nuuk, Self-governing territory of the Danish Realm Danish Krone Greenlandic
20. Grenada St. George's East Caribbean Dollar English
21. Guadeloupe Basse-Terre Euro French
Overseas department of France
22. Guatemala Guatemala City Guatemalan quetzal Spanish
23. Haiti Port-au-Prince Haitian gourde French
24. Honduras Tegucigalpa Honduran lempira Spanish
25. Jamaica Kingston Jamaican Dollar English
26. Martinique Fort-de-France, Overseas department of France Euro French
27. Mexico Mexico City Mexican peso Spanish
28. Montserrat Plymouth (official), Brades (seat of government) East Caribbean Dollar English
Overseas territory of the United Kingdom
29. Navassa Island - United States Dollar English
Insular area of the United States of America
30. Nicaragua Managua Nicaraguan cordoba Spanish
31. Panama Panama City United States Dollar Spanish
Panamanian balboa
32. Puerto Rico San Juan United States Dollar English

85
 Insular area of the United States of America Spanish
33. Saba The Bottom United States Dollar
Special municipality of the Netherlands
34. Saint Barthélemy Gustavia Euro French
Overseas collectivity of France
35. Saint Kitts and Nevis Basseterre East Caribbean Dollar English
36. Saint Lucia Castries East Caribbean Dollar English
37. Saint Martin Marigot Euro French
Overseas collectivity of France
38. Saint Pierre and Miquelon Saint-Pierre Euro French
Overseas collectivity of France
39. Saint Vincent and the Kingstown East Caribbean Dollar English
Grenadines
40. Sint Eustatius Oranjestad United States Dollar
Special municipality of the Netherlands
41. Sint Maarten Philipsburg Netherlands Antillean guilder
Constituent country of the Kingdom of the
Netherlands
42. Trinidad and Tobago Port of Spain Trinidad and Tobago Dollar English
43. Turks and Caicos Islands Cockburn Town United States Dollar English
Overseas territory of the United Kingdom
44. United States Washington, D.C. United States Dollar English
45. United States Virgin Charlotte Amalie United States Dollar English
Islands Insular area of the United States of America

South America
Name Capital Currency Official language
1. Argentina Buenos Aires Peso Spanish
2. Bolivia Sucre (official), La Paz (seat of government) Boliviano Spanish, Quechua, Aymara
3. Brazil Brasília Real Portuguese
4. Chile Santiago Peso Spanish
5. Colombia Bogotá Peso Spanish
6. Ecuador Quito United States dollar Spanish
7. Falkland Islands Stanley, Overseas territory of the United Kingdom Falkland Islands pound English
8. French Guiana Cayenne, Overseas department of France Euro French
9. Guyana Georgetown Guyanese dollar English
10. Paraguay Asunción Guaraní Spanish, Guaraní
11. Peru Lima Nuevo sol Spanish
12. Suriname Paramaribo Surinamese dollar Dutch
13. Uruguay Montevideo Uruguayan peso Spanish
14. Venezuela Caracas Bolívar fuerte Spanish

Oceania
Name Capital Currency Official language
1. American Samoa Pago Pago, Insular area of the United United States dollar English
States of America Samoan
2. Ashmore and Cartier Islands — —
External territory of Australia
[c]
3. Australia Canberra Australian dollar None
4. Baker Island — Insular area of the United States of
America
5. Cook Islands Avarua, Self-governing parliamentary New Zealand dollar, Cook Islands English, Cook Islands
democracy in free association with New dollar Māori
Zealand
6. Coral Sea Islands — External territory of Australia
7. Fiji Suva Fijian dollar
8. French Polynesia Papeete, Overseas collectivity of France CFP Franc French
9. Guam Hagåtña Insular area of the United States of
America
10. Howland Island — Insular area of the United States of
America
11. Jarvis Island — Insular area of the United States of
America
12. Johnston Atoll — Insular area of the United States of
America
13. Kingman Reef — Insular area of the United States of
America
14. Kiribati South Tarawa
15. Marshall Islands Majuro

86
16. Micronesia Palikir
17. Midway Atoll — Insular area of the United States of
America
18. Nauru Yaren (seat of government)
19. New Caledonia Nouméa, Sui generis collectivity (special CFP Franc French
collectivity) ofFrance
20. New Zealand Wellington New Zealand Dollar Maori, New Zealand
Sign, English
21. Niue Alofi Self-governing parliamentary
democracy in free association with
New Zealand
22. Norfolk Island Kingston Self-governing territory of Australia
23. Northern Mariana Islands Saipan Insular area of the United States of
America
24. Palau Ngerulmud
25. Palmyra Atoll — Insular area of the United States of
America
26. Papua New Guinea Port Moresby
27. Pitcairn Islands Adamstown Overseas territory of the United
Kingdom
28. Samoa Apia
29. Solomon Islands Honiara
30. Tokelau Nukunonu (main settlement, although Dependent territory of New
each atoll has its own administrative Zealand
centre)
31. Tonga Nukuʻalofa
32. Tuvalu Funafuti
33. Vanuatu Port Vila Vanuatu vatu Bislama, French,
English
34. Wake Island — United States dollar
Insular area of the United States of,
America
35. Wallis and Futuna Mata-Utu, Overseas collectivity of France CFP Franc French

Antarctica
Name Capital Currency Official Language
1. Bouvet Island — — —
Dependent territory of Norway
2. French Southern Territories Alfred Faure (Crozet Islands), Port-aux, Français (Kerguelen Euro French
Islands), Martin-de-Viviès (Saint Paul and Amsterdam Islands)
Overseas territory of France
3. Heard Island and McDonald — — —
Islands
External territory of Australia
4. South Georgia and the South King Edward Point, Overseas territory of the United Kingdom Pound sterling English
Sandwich Islands

NITI AAYOG REPLACEMENT OF PLANNING COMMISSION OF INDIA

Planning Commission renamed "NITIAayog" Composition of NITI Aayog
(i) India's Planning Commission will be renamed "Niti Ayog" as part of Chairperson: Prime Minister.
a plan to restructure the institution that the government believes has Governing Council: CM's (States) & Lieutenant Governors (Union
run its course. Territories).
(ii) The name,replacing"Yojana (planning)" with "niti(policy)" will be Regional Councils: Formed on need-basis, incorporates CM's & Lt
annonced in an amended resolution for the new plan body Governors of the region.
today,source said. Members: Full time basis.
(iii) The Planning Commission had suggested to a group chaired by Part-Time Members: Max 2, Rotational, from relevant institutions.
Prime Monister Narendra Modi that its replacement body should be Ex-officio Members: Max 4 from council of ministers, nominated by
structured to meet the need of changing economic paradigm and PM.
comprise sectoral experts and state's representative. Special Invitees: Experts, specialists, practitioners with domain
It was India's first Prime Minister Jawaharlal Nehru, a socialist who knowledge.
admired Joseph Stalin's drive to industrialize the Soviet Union, who in CEO: Appointed by PM for fixed tenure. Secretariat: If necessary.
1950 set up and chair- the planning Commission to map out a
development path for India's agrarian economy.

Chapter-11
BOOKS AND AUTHORS
Books Name Authors Name Books Name Authors Name

87
A Bend in the river V.S. Naipaul Half a Life V. S. Naipaul
Area of Darkness V.S. Naipaul A Suitable Girl Vikram Seth
House for Mr. Biswas V.S. Naipaul A Suitable Boy Vikram Seth
India-A Wounded Civilisation V.S. Naipaul Golden Gate Vikram Seth
Million Mutinies Now V.S. Naipaul Beastly Tales Vikram Seth
Magic Seeds V. S. Naipaul An Equal Music Vikram Seth
The Masque of Africa V. S. Naipaul Three Chinese Poets Vikram Seth
Beyond Belief V. S. Naipaul All You Who Sleep Tonight Vikram Seth
Mappings Vikram Seth Two Lives Vikram Seth The God of Small Things Arundhati Roy
From Heaven lake Vikram Seth The Shape of the Beast Arundhati Roy
Midnight’s Children Salman Rushdie The Algebra of Infinite Justice Arundhati Roy
The Satanic Verses Salman Rushdie The End of Imagination Arundhati Roy
East,West Salman Rushdie The Cost of Living Arundhati Roy
The Enchantress of Florence Salman Rushdie Power Politics Arundhati Roy
Jaguar Smile Salman Rushdie War Talk Arundhati Roy
The Moor’s Last Sigh Salman Rushdie Broken Republic Arundhati Roy
Shalimar The Clown Salman Rushdie Show business Shashi Tharoor
Fury Salman Rushdie The Five Dollar Smile and Other Stories Shashi Tharoor
Shame Salman Rushdie The Great Indian Novel Shashi Tharoor
Imaginary Homelands Salman Rushdie The Elephant, the Tiger and the Cell Phone Shashi Tharoor
My Country, My Life L K Advani Bookless in Baghdad Shashi Tharoor
A Prisoner’s Scrap Book L K Advani Nehru: The Invention of India Shashi Tharoor
Wings of Fire A P J Abdul Kalam India: From Midnight to the Millenium Shashi Tharoor
Ignited Minds A P J Abdul Kalam Reasons of State Shashi Tharoor
India 2020 A P J Abdul Kalam Riot Shashi Tharoor
India-my-Dream A P J Abdul Kalam In Custody Anita desai
Scientist to President A P J Abdul Kalam The Village By The Sea Anita desai
My Truth Indira Gandhi Fire on the Mountain Anita desai
Eternal India Indira Gandhi Clear Light of Day Anita desai
Imagining India Nandan Nilakeni Fasting,Feasting Anita desai
The White Tiger Aravind adiga The Dark Room R.K.narayan
Between the Assasination Aravind adiga Waiting for the Mahatma R.K.narayan
The Elephant Aravind Adiga The Guide R.K.Narayan My Days R.K.narayan
The Inheritance of Loss Kiran Amitav Ghosh The Financial Expert R.K.narayan
Desai Sea of Poppies Such a Long Journey Rohinton Mistry
The Shadow Lines Amitav Ghosh Malgudi Days R.K.narayan
The Hungry Tide Amitav Ghosh Painter of Sains R.K.narayan
The Glass palace Amitav Ghosh Gods, Demons and Others R.K.narayan
A Better India, A Better World Narayana Murthy The Namesake Jhumpa lahiri
Unaccustomed Earth Jhumpa Lahiri Interpreter of Maladies Jhumpa Lahiri
Dreams from My Father Barack Obama Who Says Elephant can’t Dance Louis V. Gerstner
The Audacity of Hope Barack Obama The Kite Runner Khaled Hosseini
Between hope and History Bill Clinton A thousand Splendid Suns Khaled Hosseini
My Life Bill Clinton A Tale of two cities Charles Dicken
Giving Bill Clinton Harmony Prince Charles
It Takes a Village Hillary Clinton Conversation with Myself Nelson Mandela
An Invitation to White House Hillary Clinton The Feast of the Goat Mario Vargas Losa
Living History Hillary Clinton The Exile Navtej Sarna
Daughter of the East Benazir Bhutto The Audacity of Hope Barac Obama
Pakistan-The Gathering Storm Benazir Bhutto A Passage to India E M Foster
Comment Reconciliation – Benazir Bhutto Truth, Love & Little Malice Kushwanth Singh
Between Islam Democracy and Anklets of Sunset Dileep Mistry
the West Becoming Indian Pawan Kumar Verma
Great Tragedy Z A Bhutto Songs of Blood and Sword Fatima Bhutto
If I am Assassinated Z A Bhutto The Grand Design Stephen Hawkings and
No Future Without Forgiveness Desmond Tutu Leonard Mlowdinow
Freedom from Fear Aung San Suu Kyi Imagining India- Ideas for the new century Nandan Nilekani
The Voice of hope Aung San Suu Kyi A Better India A Better Work NarayanMurthy
Letters from Burma Aung San Suu Kyi Unaccustomed Earth Jhumpa Lahiri
Universe in a Single Atom Dalai lama Unleashing India Veerapa Moily
The 3 mistakes of my Life Chetan bhagat Dreams from my Father Barack Obama
Five Point Someone Chetan bhagat Notes from a small Room Ruskin Bond
One night@ the call Center Chetan bhagat True Colours Adam Gilchrist
2 States Chetan Bhagat Six Suspects Vikas Swarup
Sea of Poppies Amitav Ghosh The Calcutta Chromosome Amitav Ghosh
Without Dreams Javed Akhtar Dr. Zivago Borris Pasternak
The Encharness of Florence Salman Rushdie Ujjaini, Sarveswaram (Poems) ONV Kurup
The Idea of Justice Amartya Sen Value of Nothing Raj Patel
The Lost symbol Dan Brown Unimagined Imran Ahmed

88
The White Tiger Arvind Adiga Way to Go Upmanyu Chaterjee
To the Last Bullet Vinita Kamte The Lacuna Barbara Kingsolver
The Art of Choosing Sheena Ainger (Orange Prize 2010)
The Museum of Innocence Orhan Pamuk Sacred Games Vikram Chandra
Lajja Taslima Nasrein A Himalayan Love Story Namita Gokhale
El Sari Rajo Javier Moro Pamuk Kiran Desai
The Finkler Question Howard Jacobson In Line of Fire Parvez Musharraf
The Big Short Michael Lewis Keeping the Faith Somnath Chaterjee
Tiger Hills Sarita Mandana After Taste Nandita Devidayal
Super Power Rahav Bahl The Golden Notebook Darris Lessing
Again Pritish Nandy Memoirs of Surrvior Darris Lessing
No Full Stops in India Mark Tully The Summer Before the Dark Darris Lessing
Besieged Md. Farooqui The Fifth Child Darris Lessing
Fragrece of Forgotten Bikes Latif Before Memory Fades Fali S Nariman
The world around us Radha Burmier Subh e Azaadi (Poem) Faiz Ahmed Faiz
Wolf Hall Hiliary Mantel Great Soul – Mahatma Gandhi and his Joseph Levyld
Matters of Discreation I K Gujaral struggle with India
Condensed Translucent Images Tomas Transtromer (Nobel Mandra (Winner of Sarswati Samman 2010) S L Bhyrappa (Kanadda
Prize) Writer)
Anth Ke Sanshaya (Winner Bihari Giridhar Rathi Phir Bhi Kuch Reh Jayega (Winner of Vyas Vishwanath Prasad
Puraskar) Samman 2010) Tiwari
The Big Short Michael Lewis Building Social Business Mohamod Yunus
Shree Ramayana M Veerapa Moily Drishti Me Srishti L M Singhvi
Mahanveshanam
Draupadi Yarlagada Laxmi Prasad Life of a Pi Yann Martel
Before Memory Fades Fali S. Nariman Target 3 Billion APJ Abdul Kalam
Goodbye Shahzadi Syam Bhatia Revolution 2020 Chetan Bhagat
Ragdarbari Srilal Shukla Incredible Banker Ravi Subrahmaniam

LATEST BOOKS IN NEWS

Name of the Book Author Remarks
The Collaborator Mirza Waheed Fictional story on Kashmir militancy
Pigeons to Post Steve Borgia History of postal services
Edge of Time Jean Piere Harrison Biography of Kalpana Chawla
Great Soul: Mahatma Gandhi and His Struggle with Joseph Lelyveld Ban sought by Maharashtra Govt.
India
The Emperor of All Maladies: A Biography of Cancer Siddhartha Winner of 2011 Pulitzer Prize in general nonfiction
Mukherjee category.
Wide Angle Anil Kumble Book of photographs by Anil Kumble.
River of Smoke Amitav Ghosh Second of Ibis trilogy by the author
Saraswati Park Anjali Joseph Winner of Betty Trask Award and the Desmond Elliot Prize
Old Delhi: Living Traditions S.Y. Quraishi Written by Chief Election Commissioner of India
His Majesty's Opponent Sugata Bose Biography of Subhash Chandra Bose
Controversially Yours Shoaib Akhtar Book by cricketer Shoaib Akhtar
Battle Hymn of the Tiger Mother Amy Chua Controversial book on parenting
The Sense of an Ending Julian Barnes Winner of 2011 Man Booker Prize
In Quest of Last Victory Navin Gulia A book by first Indian to drive nonstop to the highest
motorable mountain passes in the world, the Marsimik La
in Ladakh.
Beyond the Lines Kuldip Nayar Ban on the book demanded by some Sikh outfits
Narcopolis Jeet Thayil The book built around the opium and heroin dens of
Mumbai, was shortlisted For the 2012 Man Booker Prize.
Bring Up the Bodies Hillary Mantel 2012 Man Booker Prize winning book
The Cuckoo's Calling Robert Galbraith Robert Galbraith is the pseudonym of J.K. Rowling of the
Harry Potter series.
The Moonballer Nirupama Autobiography of former Indian tennis player who was
Vaidyanathan the first Indian woman to win a singles match at a grand
slam event.
Vanity Bagh Anees Salim Winner of The Hindu Prize for Best Fiction
Chronicler of a Corpse Bearer Cyrus Mistry Winner of DSC Prize for South Asian literature 2014
The Hindus: An Alternative History Wendy Doniger Penguin Books India has decided to withdraw the book in
agreement withShiksha Bachao Andolan committee.
The Luminaries Elaneor Catton 2013 Man Booker Prize winning book.
The Accidental Prime Minister Sanjaya Baru Controversial book by for media advisor of Dr. Manmohan
Singh
2 States Chetan Bhagat Popular film of the same name is based on this book.
The Substance and the Shadow Uday Tara Nayar Biography of film star Dilip Kumar.
The Narroe Road to Deep North Richard Flanagan 2014 Man Booker Prize winning book..

89
Book Name Author Name
Suleiman Charitra Kalyana Malla
Pre-Modern Kutchi Navigation Techniques and Voyages Ashok B. Rajeshirke (Editor)
Aatank Ke Saaye Men Garima Sanjay
God’s Bankers Gerald Posner
Food for All Uma Lele
Family Life Akhil Sharma
Faces and Places Prof. Deepak Nayyar
Indian Parliamentary Diplomacy- Speaker’s Perspective Meira Kumar
Flora of Guntur City Andhra Pradesh PR Mohana Rao
Kiran Bedi — Kaise Bani Top Cop Kiran Bedi released
Media, Magnates, Netas and Me Vinod Mehta
The Secret History of Mumbai Terror Attacks SK Rath
Neither a Hawk nor a Dove Pakistan’s Ex-Foreign Minister Khurshid M Kasuri
Farishta Kapil Isapuri
The Red Sari Javier Moro
Madhorubhagan Perumal Murugan
A Critical Appraisal Sudha Pai and Avinash Kumar
India since Independence Bipin Chandra
2 States Chetan Bhagat
Revolution 2020 Chetan Bhagat
Life is what you make it Preeti Shenoy
Gandhi Before India Ramachandara Guha
Dhyan Chand-The Wizard of Hockey Luis Fernandes
Awakening India’s Social Conscience Dr. Narendra Jadhav

Observance (National and International)
Important Years announced:
Year Of 2012 has been recognised as the “International Year of Co-operatives” by the United Nations. PM Dr.
Manmohan Singh announced Year 2012 as the National Mathematical year to give the tribute to Ramanujam, the maths legend.
January
January 1 - Global Family Day
January 1 - World Day of Peace
January 3 - World Religion Day
January 9 – Pravasi Bhartiya Diwas
January 10 – World Laughter Day
January 12 - National Youth Day
January 15 – Army Day
January 24 - National Girl Child day of India April
January 25 – National Voters Day
January 26 – International Customs Day
January 28 - Data Protection Day
January 29 - World Leprosy Day
January 30 – Martyr’s Day
February
February 2 - World Wetlands Day
February 4 - World Cancer Day
February 13 - World Radio Day
February 20 - World Day of Social Justice
February 22 - International Scouts Day
February 24 – Central Excise Day
February 28 – National Science Day
March
March 4 - World Kamau's Day
March 8 – UN Day for Women's Rights and
International Peace
March 8 - International Women's Day
March 15 - World Consumer Rights Day
March20 - International Day of the
Francophonie
March 21 - International Day for the
Elimination of Racial Discrimination
March 21 - World Forestry Day
March 21 - World Poetry Day
Chapter-12
OBSERVANCE
March 22 - World Day for Water
March 23 - World Meteorological Day
March 24 - International Day for Achievers,
World Tuberculosis Day
March 27 - World Theatre Day
Second Monday in March – World
Commonwealth Day
April 5 – National Maritime Day
April 7 - World Health Day
April 14 - Cultural Unity Day
April 16 - World Entrepreneurship Day
April 17 - World Hemophilia Day
April 18 – World Heritage Day
April 21 - World Creativity and Innovation Day June
April 22 - Earth Day
April 23 - World Book and Copyright Day
April 25 - World Malaria Day
April 26 - World Intellectual Property Day
April 29 - World Dance Day
May
May 1 - Labour Day
May 2 - International Day of Deliberately
Unemployed
May 3 – Press Freedom Day
May 7 - Rabindranath Tagore's Anniversary
Day
May 8 - World Red Cross & Red Crescent Day July
May 8-May 9 - Time of Remembrance and
Reconciliation for Those Who Lost Their Lives Birth Day
during the Second World War
May 09 – World Thalassaemia Day
May 11 – National Technology Day
May 12 - International Nurses Day
May 15 - International Day of Families
May 17 – World Telecommunication Day
May 19 - World Hepatitis Day
May 21 - World Day for Cultural Diversity for
Dialogue and Development
May 22 - International Day for Biological
Diversity
May 29 - International Day of UN
Peacekeepers
May 31 - World No Tobacco Day
1st Tuesday of May - World Asthma Day
2nd Saturday of May - World Fair Trade Day
2nd Sunday of May - International Mothers'
Day
June 1 - International Children's Day
June 5 - World Environment Day
June 8 - World Ocean Day
June 12 - World Day Against Child Labour
June 14 - World Blood Donor Day
June 20 - World Refugee Day
June 21 - World Music Day
June 23 – UN Public Service Day
June 26 - International Day against Drug
Abuse and Illicit Trafficking
3rd Sunday of June - International Fathers'
Day
July 1 - Doctor's Day, Bidhan Chandra Roy
1st Saturday of July - International Day of
Cooperatives
July 7 - International Cooperative Day
July 8 - Writers Day

90
July 11 – World Population Day
July 23 - World Stress Down day
August
August 6 – Hiroshima Day
August 7 – Nagasakhi Day
August 12 - International Youth Day
August 19 - World Humanitarian Day
August 23 - Remembrance of the Slave Trade October 8 - World Humanitarian Action Day
and its Abolition
August 29 – National Sports Day
September
September 8 - International Literacy Day
September 11 - 9/11 anniversary
September 11 - World First Aid Day
September 14 – Hindi Diwas
September 15 - International Day of
Democracy
September 15 - International Day of Engineers October 16 - World Food Day
September 15 – National Engineer’s Day
September 16 - International Ozone Day
September 21 - International Day of Peace
September 21 - World Alzheimer's Day
September 27 - World Tourism Day
September 28 - Right to Know Day
During last week of September - World
Maritime Day
October
First Monday of October - World Habitat Day
October 1 - International Day of Older Persons
October 1 - World Vegetarian Day
October 2 - International Day of Non-Violence
October 4 - World Animal Day
October 5 - World Teachers' Day
October 8 – Indian Airforce Day
October 9 - World Post Day
October 10 – National Post Day
October 10 - World Mental Health Day
October 14 - World Standards Day
October 15 - World Blind Day/ World Sight
Day
October 15 - International Day of Rural
Women
October 15 - Global Handwashing Day
October 17 - International Day for the
Eradication of Poverty
October 20 - World Statistics Day
October 24 - United Nations Day
October 30 – World Thrift Day
November
November 9 – Legal Services Day
November 9 - World Freedom Day
November 10 - World Immunization Day
November 14 - World Diabetes Day/
Children’s Day
November 16 - International Day for
Tolerance
November 17 - International Students Day
November 19 - International Men's Day
November 20 - Universal Children's Day
November 25 - International Day for the
Elimination of Violence against Women
November 26 - 26/11 Anniversary
November 30 - Computer Security Day
December
December 1 - World Aids Day
December 4 – Navy Day
December 7 – Armed Forces Flag Day
December 7 - International Civil Aviation Day
December 9 - The International Day against
Corruption
December 10 - Human Rights Day
December 19 - United Nations Day for South-
South Cooperation
December 18 – Minorities Rights Day
December 23 – Kisan Diwas (Farmer’s Day)
December 22 – National Day of Mathematics
December 24 – National Consumer Day

Chapter-13
IMPORTANT COMMITTEES
 A C Shah Committee:-NBFC, Final Accounts, Modalities Of
Implementation Of New 20 Point Programme, Frauds &
Malpractices In Banks
 Abid Hussain Committee:-Development Of Capital Markets
 B Eradi Committee:-Insolvency And Wind Up Laws
 B Sivaraman Committee:-Institutional Credit For Agricultural &
Rural Development
 B Venkatappaiah Committee:-All India Rural Credit Review
 BD Shah Committee:-Stock Lending Scheme
 BD Thakar Committee:Job Criteria In Bank Loans (Approach)
 Bhagwati Committee:Unemployment, Public Welfare
 Bhave Committee:Share Transfer Reforms
 Bhide Committee:Coordination Between Commercial Banks And
SFC's
 Bhootlingam Committee:Wage, Income & Prices
 C Rao Committee: Agricultural Policy
 CE Kamath Committee: Multi Agency Approach In Agricultural
Finance
 Chatalier Committee: Finance To Small Scale Industry
 Chesi Committee: Direct Taxes
 Cook Committee (On Behalf Of BIS - Under Basel Committee
):Capital Adequacy Of Banks
 D R Mehta Committee:Review Progress And Recommend
Improvement Measures Of IRDP
 Damle Committee:MICR
 Dandekar Committee:Regional Imbalances
 Dantwala Committee:Estimation Of Employments
 Dave Committee:Mutual Funds (Functioning)
 Dharia Committee:Public Distribution System
 DR Gadgil Committee:Agricultural Finance
 Dutta Committee:Industrial Licensing
 G Lakshmai Narayan Committee:Extension Of Credit Limits On
Basis Of Consortium
 G Sundaram Committee:Export Credit
 Gadgil Committee (1969):Lead Banking System
IMPORTANT COMMITTEES AND THEIR FOCUS AREAS
 Godwala Committee:Rural Finance
 Goiporia Committee:Customer Service In Banks
 GS Dahotre Committee:Credit Requirements Of Leasing Industry
 GS Patel Committee:Carry Forward System On Stock Exchanges
 Hathi Committee:Soiled Banknotes
 Hazari Committee (1967):Industrial Policy
 IT Vaz Committee:Working Capital Finance In Banks
 J Reddy Committee:Reforms In Insurance Sector
 James Raj Committee:Functioning Of Public Sector Banks
 Jankiramanan Committee:Securities Transactions Of Banks &
Financial Institutions
 JV Shetty Committee:Consortium Advances
 K Madhav Das Committee:Urban Cooperative Banks
 Kalyansundaram Committee:Introduction Of Factoring Services
In India
 Kamath Committee:Education Loan Scheme
 Karve Committee:Small Scale Industry
 Khanna Committee:Non Performing Assets
 Khusrau Committee:Agricultural Credit
 KS Krishnaswamy Committee:Role Of Banks In Priority Sector
And 20 Point Economic Programme
 L K Jha Committee:Indirect Taxes
 LC Gupta Committee:Financial Derivatives
 Mahadevan Committee:Single Window System
 Mahalanobis Committee:Income Distribution
 Marathe Committee:Licensing Of New Banks
 ML Dantwala Committee:Regional Rural Banks
 Mrs. KS Shere Committee:Electronic Fund Transfer
 Narsimham Committee:Financial System
 Omkar Goswami Committee:Industrial Sickness And Corporate
Restructuring
 P Selvam Committee:Non Performing Assets Of Banks
 PC Luther Committee:Productivity, Operational Efficiency &
Profitability Of Banks
 Pillai Committee:Pay Scales Of Bank Officers

91
 PR Khanna Committee:Develop Appropriate Supervisory
Framework For NBFC
 Purshottam Das Committee:Agricultural Finance And
Cooperative Societies
 R Jilani Banks:Inspection System Of Banks
 R S Saria Committee:Agricultural Finance And Cooperative
Societies
 Raghavan Committee:Competition Law
 Raja Chelliah Committee:Tax Reforms
 Ram Niwas Mirdha Committee (JPC):Securities Scam
 Rangrajan Committee:Computerization Of Banking Industry and
Public Sector Disinvestment
 Rashid Jilani Committee:Cash Credit System
 Ray Committee:Industrial Sickness
 RG Saraiya Committee (1972):Banking Commission
 RK Hajare Committee:Differential Interest Rates Scheme
 RN Malhotra Committee:Reforms In Insurance Sector
 RN Mirdha Committee:Cooperative Societies
 RV Gupta Committee:Agricultural Credit Delivery
 S Padmanabhan Committee:Onsite Supervision Function Of
Banks and Inspection Of Banks (By RBI)
 Samal Committee:Rural Credit
 SC Choksi Committee:Direct Tax Law
 SK Kalia Committee:Role Of NGO And SHG In Credit
 Sodhani Committee:Foreign Exchange Markets In NRI Investment
In India
 SS Nadkarni Committee:Trading In Public Sector Banks
 SS Tarapore Committee:Capital Account Convertibility
 Sukhmoy Chakravarty Committee:To Review The Working Of
Monetary System
 Thingalaya Committee:Restructuring Of RRB
 Tiwari Committee: Rehabilitation Of Sick Industrial Undertakings
 UK Sharma Committee:Lead Bank Scheme (Review)
 Usha Thorat Panel: Financial Inclusion
 Vaghul Committee:Mutual Fund Scheme
 Varshney Committee:Revised Methods For Loans (>2 Lakhs)
 Venketaiya Committee:Review Of Rural Financing System
 Vipin Malik Committee:Consolidated Accounting By Banks
 Vyas Committee:Rural Credit
 Wanchoo Committee:Direct Taxes
 WS Saraf Committee:Technology Issues In Banking Industry
 Y H Malegam Committee:Disclosure Norms For Public Issues
 YV Reddy Committee:Reforms In Small Savings
 Abid Hussain Committee: On Small Scale Industries
 Athreya Committee: Restructuring Of IDBI
 Basel Committee: Banking Supervision
 C B Bhave Committee : Company Information
 Chandra Shekhar Committee : Venture Capital
 Chandrate Committee: Delisting In Sharemarket
 Dave Committee (2000) : Pension Scheme For Unorganized
Sector
 Deepak Parikh Committee : To Revive Unit Trust If India (UTI)
 Goiporia Committee : Improvement In The Customer Service At
Primary (Urban) Cooperative Banks
 Jankiramanan Committee : Securities Transactions
 Kelkar Committee : Tax Structure Reforms
 Khan Working Group :Development Finance Institutions
 Khusro Committee : Agricultural Credit System
 145.Kumarmanglam Birla Report: Corporate Governance
 Malhotra Committee : Broad Framework Of Insurance Sector
 Marathe Committee: Recommendation For Urban Co-operative
Banks
 Mckinsey Report: Merger Of 7 Associate Banks With SBI
 Narismhan Committee: Banking Reforms
 NN Vohra Committee : Relations (Nexus) Of Politicians With
Criminals
 Parekh Committee : Infrastructure Financing
 Prasad Panel : International Trade And Services
 R V Gupta Committee : Small Savings
 Raja Chelliah Committee: Tax Reforms
 Rekhi Committee : Indirect Taxes
 RV Gupta Committee : Agricultural Credit
 S P Talwar Committee: Restructuring Of Weak Public Sector Bank
 S Tendulkar Committee: Redefining Poverty Line And Its
Calculation Formula
 Shah Committee : Reforms Relating To Non Banking Financial
Companies (NFBC)

Some Recent Working Groups & Committees by RBI & Their Focus Area
Note: Name of Chairperson is given.
1. Working Group on Benchmark Prime Lending Rate (BPLR): Deepak 14. Working Group on Rehabilitation of Sick SMEs: Dr. K. C.
Mohanty Chakrabarty
2. Working Group on Surveys: Deepak Mohanty 15. Internal Technical Group on Seasonal Movements in Inflation: Dr.
3. High Level Committee to Review Lead Bank Scheme: Usha Thorat Balvant Singh
4. Working Group to Review the Business Correspondent Model: P 16. Working Group to Examine the Procedures and Processes of
Vijaya Bhaskar Rao Agricultural Loans: C P Swarankar
5. High Level Group on Systems and Procedures for Currency 17. Task Force on Empowering RRB Boards for Operational Efficiency:
Distribution: Usha Thorat Dr. K.G. Karmakar
6. G20 Working Group on Enhancing Sound Regulation and 18. Technical Group set up to Review Legislations on Money Lending:
Strengthening Transparency: Dr. RakeshMohan and Mr. Tiff Macklem Shri.S. C. Gupta
7. Committee on Financial Sector Assessment: Dr. Rakesh Mohan 19. Technical Group on Statistics for International Trade in Banking
8. High Level Committee on Estimation of Savings and Investment: Dr. Services: Shri K.S.R.Rao
C. Rangarajan 20. Technical Advisory Group On Development Of Leading Economic
9. Committee on the Global Financial System (CGFS) on Capital Flows Indicators For Indian Economy Dr. R B Barman
and Emerging Market Economies: Dr. Rakesh Mohan 21. Working Group on Savings for the Eleventh Five Year Plan (2007-
10. Working Group on Defraying Cost of ICT Solutions for RRBs: Shri 08 to 2011-12): Dr.Rakesh Mohan
G. Padmanabhan 22. Working Group on Compilation of State Government Liabilities:
11. Working Group on IT support for Urban Cooperative Banks: R Dr. N.D. Jadhav
Gandhi 23. Working group to formulate a scheme for Ensuring
12. Working Group on Technology Upgradation of Regional Rural Reasonableness of Bank Charges: N. Sadasivam
Banks: Shri G. Srinivasan 24. Committee on Fuller Capital Account Convertibility: S.S.Tarapore
13. Interest Rate Futures: Shri V.K. Sharma
4. BK Chaturvedi Committee – S Band Scam
Other Important Committees 5. JC Patil and P Subramanyam Committee – Aadarsh Housing Society
1. B N Srikrishna Committee – Separate state of Telengana Issue Scam
2. Shivraj V Patil Committee: Report on 2 G Scam
3. V K Shunglu Committee – CWG Scam

92
 Chapter-14
SPORTS
TROPHIES AND TERMS ASSOCIATED WITH SPORTS
Base Ball: Trophy, Vijay Merchant Trophy, Vizzy Trophy, Wills Trophy, World
Terms: Base, Battery, Bunting, Catcher, Diamond, Hitter, Home, Series Cup, Ashes cup.
Infield, Outfield, Pinch, Pitcher plate, Putout, Short stop, Strike
Football/Soccer:
Billiards: Terms: Midfieler, Banana Kick, Bicycle Kick, Centre Circle, Centre Line,
Terms: Baulk line, Bolting, Cannon, Cue, Hazard, In-off, Jigger, Long Centre Spot, Chest Trap, Chip pass, defenders, Bootleg, Corner kick,
Jenney, Pot, Scratch, Screw back, Short Jenney, Spot stroke Direct free kick, Dribble, Goal kick, free kick, header, hat trick,
handball, juggling, Off side, Penalty kick, Thown in, Tripping, Back,
Badminton: forward line, forward pass, Red Card, Yellow Card, Back Heel
Term: Baseline, Carry, centre Line, Back Court, Fault, hairpin net shot, Trophies: Airlines Cup, America Cup, Asia Cup, Asian Women’s Cup,
half court shot, Let, Rally, wood shot, deuce, Drop, Love all, Smash, Bandodkar Trophy, B.C.Roy Trophy, Begum Hazrat Mahal Cup,
Feint, Balk, clear. Bicentennial Gold Cup, Bordoloi Trophy, Colombo Cup, DCM Cup,
Trophies: Agarwal Cup , Amrit Diwan Cup, Australian Cup, Chadha Winner’s Cup, Durand Cup, European Cup, FA Cup, Federation Cup,
Cup, European Cup, Harilela Cup, Konica Cup, Ibrahim Rahimatollah G.V.Raja Memorial Trophy, Gold Cup, Governor’s Cup, Great Wall Cup,
Challenge Cup, Narang Cup, Sophia Kitiakara Cup, SR Ruia Cup, IFA Shield, Independence Day Cup, Indira Gandhi Trophy, Jawaharlal
Thomas Cup, Tunku Abdul Rahman Cup, Uber Cup, World Cup, Yonex Nehru Gold Cup, Jules Rimet Trophy, Kalinga Cup, Kings Cup, Nehru
Cup. Gold Cup, Nizam Gold Cup, Raghbir Singh Memorial Cup, Rajiv Gandhi
Trophy, Rovers Cup, Sanjay Gold Cup, Santosh Trophy, Sir Ashutosh
Basketball: Mukherjee Trophy, Stafford Cup, Subroto Cup, U.S.Cup, Vittal Trophy,
Terms: Ball, Hack a Shaq, Point forward, Basket, Swingman, Blocking, World Cup, National League.
swish, Carrying, Dribbling, Free throw, Held ball, Holding, Jump ball,
Multiple throws, Pivot, Shifting, Zone Golf:
Trophies: NBA, Basalat Jha Trophy, BC Gupta Trophy, Federation Cup, Terms: Best-ball foursome, Bogey, Bunker, Caddie, Dormy, Fairway,
SM Arjuna Raja Trophy, Todd memorial Trophy, William Jones Cup Fourball, Foursome, Greed holes, Links, Niblic, Par, Put, Rough,
Stymied, Tee, Threesome
Boat Rowing: Trophies: Canada Cup, Eisenhower Trophy, Muthiah Gold Cup,
Terms: Bow, Bucket, Cow, Ergometer, Feather, Paddle, Ragatta Nomura Trophy Paralamdi Trophy, Prince of Wales Cup, Ryder Cup,
Trophies: American Cup (Yatch racing ), Wellington Trophy (India) Walker Cup, US Masters, U.S. Open, U.S.PGA Championship, British
Open Championship
Boxing:
Terms: Auxiliary point system, Babit punch, Break, Cut, Defence, Hockey:
Down, Hook, Jab, Lying on, Knock out, Seconds out, Slam, Upper cut, Terms: Bully, Carry, Corner, Dribble, Hat-trick, Off-side, Roll-in, Scoop,
Weight in, Win by knockout. Short corner, Stick, Striking circle, Tie-breaker, Forward, Hooking,
Trophies: Aspy Adjania Trophy, Federation Cup. Slashing, winger, tripping,
Trophies: Agha Khan Cup, Allwyan Asia cup, Azlan Shah Cup, Beighton
Bridge: cup, BMW Trophy, Bombay Gold Cup, Champions Trophy, Clarke
Terms: Holkar Trophy, Ruia Gold Cup, Singhania Trophy Trophy, Dhyan Chand Trophy, Esanda Champions Cup, Gurmeet
Trophy, Guru Nanak Cup Gyanvati Devi Trophy, Indira Gandhi Cup,
Chess: Intercontinental Cup, Khan Abdul Gaffar Khan Cup, Kuppaswamy
Terms: Bishop, Castle, Checkmate, Gambit, King, Knight, Pawan, Naidu Cup, Lady Rattan Tata Cup (women), Lal Bahadur Shastri Cup,
Queen, Rook, Stalemate Maharaja Ranjit Singh Gold Cup, Modi Gold Cup, Murugappa Gold
Cup, Nehru Trophy, Obaidullah Gold Cup, Ranga Swami Cup, Shriram
Cricket: Trophy, Tun Abdul Razak Cup, Wellington Cup, World Cup, Yadavindra
Terms: Agricultural Shot, Anchor, Appeal, Ashes, Asking rate, Back Cup
Foot, Back lift, bail, ball, bat, beamer, beehive, bodyline, bouncer,
boundary, Bump Ball, Bye, Cameo, Carrom Ball, Chin Music, dilscoop, Polo:
Doosra, googly, Caught, Chinaman, Cover Drive, Crease, Drive, Duck, Terms: Bunker, Chukker, Mallet Trophies: Ezar Cup, Prithi Singh Cup,
Follow on, Googly, Hat-trick, Draw, Duck Worth Lewis, feather touch, Radha Mohan Cup, Winchester Cup.
flipper, free hit, forward defence, French cut, gully, hawk-eye, Yorker,
hook, maiden, Nelson, off side, on side, out swing, pinch hitter, pitch, Table Tennis:
popping crease, powerplay, tail ender, unde arm, Hit wicket, l.b.w., Terms: Backspin, Blade, chop, counter loop, flick, gluing up, penhold,
Legbreak, Leg bye, Maiden over, No ball, Off break, On drive, Out, ping pong, smah, top spin
Over, Pitch, Popping crease, Rubber, Run Down, Run out, Sixer, Silly Trophies: Asian Cup, Berna Bellack Cup, Corbillion Cup (women),
Point, Square leg, Stone walling, Straight drive, Stumped, Wicket Electra Gold cup(women), Gasper Giest Prize, Grand Prix, Jayalaxmi
Trophies: Anthony D’Mellow Trophy, Ashes, Asia Cup, Benson and cup (women), Kamala ramanujan cup, Pithapuram cup (Men),
Hedges Cup, Bose Trophy, Champions Trophy, Charminar Challenge Swaythling cup (men), Travancore Cup (women), U Thant cup, World
Cup, CKNayudu Trophy, Duleep Trophy, Cooch-Behar Trophy, Deodar Cup
Trophy, GDBirla Trophy, Gillette Cup, Ghulam Ahmad Trophym,
Jawaharlal Nehru Cup, McDowells Challenge Cup, Merchant Trophy, Lawn Tennis:
Moin-ud-Dowla Cup, Natwest Trophy, Prudential Cup, Sharjah Cup, Terms: Ace, Advantage, Ball Boy, Base Line, Backhand Stroke, Break,
Rani Jhansi Trophy, Ranji Trophy, Rohinton Baria Trophy, Rothmans Deuce, Double Fault, Fault, Drop Shot, Grand Slam, Hawk-eye, Lob,
Cup, Sheesh Mahal Trophy, Sheffield Shield, Texaco Cup, Vijay Hazare Ground stroke, Half volley, Let, Smash, Volley,
Trophies: Ambre Solaire Cup, Davis Cup, Dr Rajendra Prasad Cup, Terms: Blocking, Doubling, Heave, Holding, Love, Point, Service, Volley
Edgbaston cup, Federation Cup, Ghafar Cup, Grand Prix, hamlet cup, Trophies: Federation Cup, Shivanthi Gold cup, World cup.
Mercedes Cup, Nations’s Cup, Weightman Cup, Wimbledon Trophy,
World Cup, US Open, French Open, Australian Open Wrestling:
Terms: Half Nelson, Head lock, Heave, Hold, Rebouts, Scissor
Volleyball: Trophies: Bharat Kesari, Burdwan shield, World Cup

NEW VENUE ANNOUNCED

 Asian Games 2018 – Jakarta, Indonesia.
 ICC Cricket World Cup 2015 – Australia and New Zealand
 Olympics 2016 – Brazil
 FIFA 2018 - Russia
 Commonwealth Games 2018 – Gold Coast, Australia
 FIFA 2022 – Qatar
 ICC Cricket World Cup 2019 - England
 ICC T20 World Cup 2016 – India
 ICC Cricket World Cup 2023- India

Important Sports Persons

 Cricket- Sachin Tendulkar, Rahul Dravid, Mahendra Singh Dhoni, Virat Kohli, Gautam Gambhir, Virender Sehwag, V. V. S. Laxman,
Suresh Raina, Rohit Sharma, Yuvraj Singh, Zaheer Khan, Harbhajn Singh, Anjum Chopra, Mithali Raj,
 Football- I.M. Vijayan, Baichung Bhutia, Sunil Chetri, Climax Lawrence, Mahesh Gawli, Shanmugam Venkatesh
 Hockey- Ignace Tirkey, Sarvanjit Singh, Rajpal Singh, Shivendra Singh, Arjun Halappa, Vikram Pillay, Sardar Singh, Sandeep Singh,
Sreejesh Ravindran, Bharat Chettri
 Lawn Tennis- Leander Paes, Mahesh Bhupati, Rohan Bopanna, Somdev Dev Burman, Sania Mirza
 Badminton- Saina Nehwal, Jwala Gutta, Chetan Anand, Anup Sridhar , Pullela Gopichand, Madhumita Bish
 Chess- Viswanathan Anand, P. Harikrishna, Parimarjan Negi, Manuel Aaron, Koneru Humpy, Krishnan Sasikiran, Dibyendu Barua
 Shooting- Abhinav Bindra, Gagan Narang, Sanjeev Rajput, Gagan Narang, Manavjit Singh Sandhu, Rajvardhan Singh Rathode
,Birnedeep Sodhi, Tejaswini-Sawant , Lajja Gauswami, Anjali Bhagwat, Anisa Sayyed
 Boxing- Vijender Singh, Devendro Singh, Akhil Kumar, Amandeep Singh, Suranjoy Singh, Jai Bhagawan, Manoj Kumar
 Wrestling – Sushil Kumar, Anil Kumar, Sanjay Kumar, Ravinder Singh, Alka Tomar
 Squash- Dipika Pallikal, Ritwik Bhattacharya, Saurav Ghosal, Joshna Chinappa, Saumya Karki, Vibhav Hedge
 Billiards- Pankaj Advani, Geet Sethi, Ashok Shandilya, Michael Ferreira
 Weight Lifting- Karnam Malleswari, Ravi Kumar Katulu, Renu Bala Chanu Yumnam, Kunjarani Devi
 Athletics- Anju Bobby George, Sunita Rani, Stephie D'Souza, Krishna Poonia, Kavita Raut, Jyotirmoyee Sikdar,
 Swimming- Anita Sood, Nisha Millet, Khazan Singh, Mihir Sen, Bula Chowdhury
 Archery - Deepika Kumari, Dola Banerjee,Rahul Banerjee, Jayant Talukdar, Tarundeep Rai, Satyadev Prasad, Limba Ram
 Table Tennis- Poulomi Ghatak, Ranjit Singh Gujjar, Neha Aggarwal

Chapter-15
CENSUS 2011: IMPORTANT FACTS
 2001-2011 is the first decade (with the exception of 1911-1921)
which has actually added lesser population compared to the
previous decade.
 Uttar Pradesh (199.5 million) is the most populous State in the
country followed by Maharashtra with 112 million.
 The percentage decadal growth rates of the six most populous
States have declined during 2001-2011 compared to 1991-2001:
a. Uttar Pradesh (25.85% to 20.09%)
b. Maharashtra (22.73% to 15.99%)
c. Bihar (28.62% to 25.07%)
d. West Bengal (17.77 % to 13.93%)
e. Andhra Pradesh (14.59% to 11.10%)
f. Madhya Pradesh (24.26% to 20.30%)
 During 2001-2011, as many as 25 States/UTs with a share of
about 85% of the country's population registered an annual
growth rate of less than 2% as compared to, 15 States/UTs with a
share of about 42% during the period 1991-2001.
 15 States/UTs have grown by less than 1.5% per annum during
2001-2011, while the number of such States/UTs was only 4
during the previous decade.
 The total number of children in the age-group 0-6 is 158.8 million
(-5 million since 2001).
 Twenty States and Union Territories now have over one million
children in the age group 0-6 years. On the other extreme, there
are five States and Union Territories in the country that are yet to
reach the one hundred thousand mark.
CENSUS 2011: IMPORTANT FACTS
 Uttar Pradesh (29.7 million), Bihar (18.6 million), Maharashtra
(12.8 million), Madhya Pradesh (10.5 million) and Rajasthan (10.5
million) constitute 52% children in the age group of 0-6 years.
 Population (0-6 years) 2001-2011 registered minus (-)3.08
percent growth with minus ()2.42 for males and -3.80 for
females.
 The proportion of Child Population in the age group of 0-6 years
to total population is 13.1 percent while the corresponding figure
in 2001 was 15.9 percent. The decline has been to the extent of
2.8 points.
 Overall sex ratio at the national level has increased by 7 points to
reach 940 at Census 2011 as against 933 in Census 2001. This is
the highest sex ratio recorded since Census 1971 and a shade
lower than 1961. Increase in sex ratio is observed in 29
States/UTs.
 Three major States (J&K, Bihar & Gujarat) have shown decline in
sex ratio as compared to Census 2001.
 Kerala with 1084 has the highest sex ratio followed by
Puducherry with 1038, Daman & Diu has the lowest sex ratio of
618.
 Child sex ratio (0-6 years) is 914. Increasing trend in the child sex
ratio (0-6) seen in Punjab, Haryana, Himachal Pradesh, Gujarat,
Tamil Nadu, Mizoram and A&N Islands. In all remaining 27
States/UTs, the child sex ratio show decline over Census 2001.

94
 Mizoram has the highest child sex ratio (0-6 years) of 971
followed by Meghalaya with 970. Haryana is at the bottom with
ratio of 830 followed by Punjab with 846.
 Literacy rate has gone up from 64.83% in 2001 to 74.04% in 2011
showing an increase of 9.21 percentage points.
 Percentage growth in literacy during 2001-2011 is 38.82; males:
31.98% & females : 49.10%. Literates constitute 74% of the total
population aged seven and above and illiterates form 26%

Chapter-16
IMPORTANT AWARDS
PADMA AWARDEES 2015
Here is the list of the 104 awardees of Padma Vibhushan, Padma Bhushan and Padma Shri which were announced on the eve of the 66th
Republic day.
Padma Vibhushan
 Shri L. K. Advani, Public Affairs, Gujarat  Shri Mohammad Yusuf Khan alias Dilip  Shri Kottayan K. Venugopal, Public
 Shri Amitabh Bachchan, Art, Maharashtra Kumar,Art, Maharashtra Affairs, Delhi
 Shri Prakash Singh Badal, Public Affairs,  Shri Jagadguru Ramanandacharya Swami  Shri Karim Al Hussaini Aga khan, Trade
Punjab Rambhadracharya, Others, Uttar Pradesh and Industry, France/UK
 Dr. D. Veerendra Heggade,Social Work ,  Prof. MalurRamaswamy Srinivasan,
Karnataka Science and Engineering ,Tamil Nadu

Padma Bhushan
 Gulam Mohammed Sheikh, Art-Painting, Gujarat  Dr Dhirubhai Thaker, Literature and Education, Gujarat
 Begum Parveen Sultana, Art-Classical Singing, Maharashtra  Vairamuthu, Literature and Education, Tamil Nadu.
 T.H. Vinayakram, Art-Ghatam Artist, Tamil Nadu  Ruskin Bond, Literature and Education, Uttarakhand
 Kamal Haasan, Art-Cinema, Tamil Nadu  Pullela Gopichand, Sports-Badminton, Andhra Pradesh
 Justice Dalveer Bhandari, Public Affairs, Delhi  Leander Paes, Sports-Tennis, Maharashtra
 Prof Padmanabhan Balaram, Science and Engineering, Karnataka  Vijayendra Nath Kaul, Civil Service, Delhi
 Prof Jyeshtharaj Joshi, Science and Engineering, Maharashtra  Late Justice Jagdish Sharan Verma, Public Affairs, Uttar Pradesh
 Dr Madappa Mahadevappa, Science and Engineering, Karnataka  Late Dr Anumolu Ramakrishna, Science and Engineering, Andhra
 Dr Thirumalachari Ramasami, Science and Engineering, Delhi Pradesh
 Dr Vinod Prakash Sharma, Science and Engineering, Delhi  Prof Anisuzzaman, Literature and Education, Bangladesh
 Dr Radhakrishnan Koppillil, Science and Engineering,  Prof Lloyd I Rudolph, Literature and Education, USA
 Karnataka Dr Mrityunjay Athreya, Literature and Education, Delhi  Prof Susanne H Rudolph, Literature and Education, USA
 Anita Desai, Literature and Education, Delhi  Dr (Smt) Neelam Kler, Medicine-Neonatology, Delhi

Padma Shri
 Dr. Manjula Anagani, Medicine, Telangana
 Shri S. Arunan,Science and Engineering , Karnataka
 Ms. Kanyakumari Avasarala, Art,Tamil Nadu
 Prof. (Dr.) Yogesh Kumar Chawla, Medicine, Chandigarh
 Smt. Jayakumari Chikkala, Medicine, Delhi
 Shri Bibek Debroy,Literature and Education, Delhi
 Dr. Sarungbam Bimola Kumari Devi, Medicine, Manipur
 Dr. Ashok Gulati, Public Affairs, Delhi
 Dr. Randeep Guleria, Medicine, Delhi
 Dr. K. P. Haridas,Medicine, Kerala
 Shri Rahul Jain, Art, Delhi
 Shri Ravindra Jain, Art, Maharashtra
 Dr. Sunil Jogi, Literature and Education, Delhi
 Shri Prasoon Joshi, Art, Maharashtra
 Dr. Prafulla Kar,Art, Odisha
 Ms. Saba Anjum, Sports, Chhattisgarh
 Smt. Ushakiran Khan, Literature and Education, Bihar
 Dr. Rajesh Kotecha, Medicine, Rajasthan
 Prof. Alka Kriplani ,Medicine, Delhi
 Dr. Harsh Kumar, Medicine, Delhi
 Shri Narayana Purushothama Mallaya,Literature and
Education,Kerala
 Shri Lambert Mascarenhas,Literature and Education, Goa
 Dr. (Mrs.) Janak Palta ,McGilligan Social Work, Madhya Pradesh
 Shri Veerendra Raj Mehta, Social Work, Delhi
 Shri Tarak Mehta, Art, Gujarat
 Shri Neil Herbert Nongkynrih ,Art, Meghalaya
 Shri Chewang Norphel, Others, Jammu and Kashmir
 Shri T. V. Mohandas Pai, Trade and Industry, Karnataka
 Dr.Tejas Patel ,Medicine, Gujarat
 Shri Jadav Molai Peyang, Others, Assam
 Smt. Bimla Poddar, Other, UttarPradesh
 Dr. N. Prabhakar,Science and Engineering, Delhi
 Dr. Prahalada ,Science and Engineering ,Maharashtra
 Dr. Narendra Prasad,Medicine, Bihar
 Shri Ram Bahadur Rai, Literature and Education ,Delhi

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 Ms. Mithali Raj, Sports, Telangana
 Shri P. V. Rajaraman, Civil Service ,Tamil Nadu
 Prof. J. S. Rajput,Literature and Education,Uttar Pradesh
 Shri Kota Srinivasa Rao, Art, Andhra Pradesh
 Prof. Bimal Roy ,Literature and Education,West Bengal
 Shri Shekhar Sen ,Art, Maharashtra
 Shri Gunvant Shah ,Literature and Education, Gujarat
 Shri Brahmdev Sharma(Bhaiji), Literature and Education,Delhi
 Shri Manu Sharma, Literature and Education ,Uttar Pradesh
 Prof. Yog Raj Sharma, Medicine, Delhi
 Shri Vasant Shastri,Science and Engineering ,Karnataka
 Shri S. K. Shivkumar ,Science and Engineering, Karnataka
 Ms. P. V. Sindhu, Sports, Telangana
 Shri Sardara Singh,Sports, Haryana
 Ms. Arunima Sinha, Sports, Uttar Pradesh
 Shri Mahesh Raj Soni, Art, Rajasthan
 Dr.Nikhil Tandon, Medicine, Delhi
 Shri H. Thegtse Rinpoche,Social Work, Arunachal Pradesh
 Dr.Hargovind Laxmishanker Trivedi,Medicine, Gujarat
 Shri Huang Baosheng (Foreigner) , others, Gujarat
 Prof. Jacques Blamont(Foreigner), Science Engineering, France
 Late Shri Syedna Mohammad Burhanuddin
(Posthumous),Others,Maharashtra
 Shri Jean-Claude Carriere (Foreigner), Literature and Education,
France
 Dr. Nandrajan “Raj” Chetty (NRI/PIO) ,Trade and Industry, USA
 Shri Geoge L.Hart(Foreigner), Others,USA
 Jagat Guru Amrta Suryananda Maha Raja(NRI/PIO),
Others,Portugal
 Late Shri Meetha Lal Mehta (Posthumous),Civil Service,Tamil
Nadu
 Dr. Dattatreyudu Nori ,Medicine, USA
 Dr. Raghu Rama Pillarisetti (NRI/PIO) , Medicine,USA
 Dr.Saumitra Rawat (NRI/PIO) ,Medicine,UK
 Prof. Annette Schmiedchen (Foreigner), Literature and Education,
Germany
 Late Shri Pran Kumar Saharma alias Pran(Posthumous),Art, Delhi
Late
 Shri R. Vasudevan (Posthumous), Civil Service, Tamil Nadu.

62ND NATIONAL FILM AWARDS

The 62nd National Film Awards ceremony is an upcoming event during which the Directorate of Film Festivals presents its annual National
Film Awards to honor the best films of 2014 in the Indian cinema. The awards were announced on March 24, 2015 and the ceremony will be
held on May 3, 2015.
DADASAHEB PHALKE
Introduced in 1969, the Dadasaheb Phalke Award is the highest award given to recognise the contributions of film personalities towards the
[5]
development of Indian cinema and for distinguished contributions to the medium, its growth and promotion.
For the year 2014, the award was announced on 23 March 2015 to be presented to actor, film-maker Shashi Kapoor. He has won two National
[6]
Film Awards including Best Actorfor New Delhi Times in 1985 and is also Padma Bhushan recipient of 2011.
Name of Award Awardee(s) Awarded As Awards
Dadasaheb Phalke Award Shashi Kapoor Actor, Film-maker Swarna Kamal, 1 million (US$16,000) and a Shawl

OSCAR AWARD 2015

The 87th Academy Awards ceremony, presented by the Academy of Motion Picture Arts and Sciences (AMPAS), honored the bestfilms of
2014 and took place on February 22, 2015, at the Dolby Theatre in Hollywood, Los Angeles.
The 87th Academy Awards ceremony, presented by the Academy of Motion Picture Arts and Sciences (AMPAS), honored the best films of 2014
and took place on February 22, 2015, at the Dolby Theatre in Hollywood, Los Angeles beginning at 5:30 p.m.During the ceremony, the
Academy of Motion Picture Arts and Sciences presented Academy Awards (commonly referred to as Oscars) in 24 categories. The ceremony,
televised in the United States by ABC, was produced by Neil Meron and Craig Zadan and directed by Hamish Hamilton. Actor Neil Patrick Harris
hosted the ceremony for the first time. In related events, the Academy held its 6th annual Governors Awards ceremony at the Grand Ballroom
of the Hollywood and Highland Center on November 8, 2014.On February 7, 2015, in a ceremony at The Beverly Hills Hotel in Beverly Hills,
California, the Academy Awards for Technical Achievement were presented by hosts Margot Robbie and Miles Teller
Winners 2015
 Best Picture --Birdman — Alejandro G. Inarritu, John Lesher and  Achievement in Sound Editing--American Sniper — Alan Robert
James W. Skotchdopole Murray Bub Asman
 Best Director --Alejandro González Iñárritu — Birdman  Achievement in Visual Effects--Interstellar — Ian Hunter, Scott
 Best Actor-- Eddie Redmayne — The Theory of Everything Fisher, Andrew Lockley and Paul Franklin
 Best Actress--Julianne Moore — Still Alice  Best Animated Short--Feast — Patrick Osborne and Kristina
 Best Supporting Actor--J.K. Simmons — Whiplash Reed
 Best Supporting Actress --Patricia Arquette — Boyhood  Best Animated Movie--Big Hero Six — Don Hall, Chris Williams
 Achievement in Costume Design--Milena Canonero — The and Roy Conli
Grand Budapest Hotel  Achievement in Production Design--The Grand Budapest Hotel
 Achievement in Makeup and Hairstyling --Frances Hannon and — Adam Stockhausen and Anna Pinnock
Mark Coulier — The Grand Budapest Hotel  Achievement in Cinematography--Birdman — Emannuel Lubezki
 Best Foreign Language Film--Ida – Pawel Pawlikowski  Achievement in Film Editing--Whipalsh — Tom Cross
 Best Live Action Short Film --The Phone Call — Matt Kirkby and  Best Documentary Feature--Citizen Four — Laura Poitras,
James Lucas Mathilde Bonnefoy and Dirk Wilutzky
 Best Documentary Short Subject-- Crisis Hotline: Veterans Press  Best Original Song--Glory — John Stephens and Lonnie Lynn
1 — Ellen Goosenberg Kent and Dana Perry  Best Original Score--The Grand Budapest Hotel — Alexandre
 Original Screenplay --Birdman – Alejandro G. Iñárritu, Nicolás Desplat
Giacobone, Alexander Dinelaris, Jr. and Armando Bo  Best Adapted Screenplay--The Imitation Game – Graham Moore
 Achievement in Sound Mixing--Whiplash — Craig Mann, Ben
Wilkins, Thomas Curley

NOBLE PRIZE 2014

Every year since 1901 the Nobel Prize has been awarded for achievements in physics, chemistry, physiology or medicine, literature and for
peace. The Nobel Prize is an international award administered by the Nobel Foundation in Stockholm, Sweden. In 1968, Sveriges Riksbank

96
established The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, founder of the Nobel Prize. Each prize consists of a
medal, personal diploma, and a cash award
Year Physics Chemistry Physiology Literature Peace Economics
or Medicine
2013 François Englert; Martin Karplus; James E. Rothman; Alice Organisation for the Eugene F. Fama;
Peter W. Higgs Michael Levitt; Randy W. Schekman; Munro Prohibition of Lars Peter Hansen;
Arieh Warshel Thomas C. Südhof Chemical Weapons Robert J. Shiller
2014 Isamu Akasaki; Eric Betzig; Stefan John O'Keefe; May-Britt Patrick Kailash Satyarthi; Jean Tirole
Hiroshi Amano; Hell; William Moser; Edvard Moser Modiano Malala Yousafzai
Shuji Nakamura Moerner
LIST OF NOBEL LAUREATES BY INDIAS
1. Ronald Ross (1857 - 1932) - Nobel Prize for Medicine in 1902. 7. Abdus Salam (1926 - 1996) - Nobel Prize for Physics in 1979.
2. Rudyard Kipling (1865-1936) - Nobel Prize for Literature in 1907. 8. Subramaniam Chandrasekar(1910 - 1995) - Nobel Prize for physics
3. Rabindranath Tagore (1861 - 1941) - Nobel Prize for Literature in in 1983.
1913. 9. Amartya Sen (1933) - Nobel Prize for Economics in 1998.
4. C V Raman (1888 - 1970) - Nobel Prize for Physics in 1930. 10. V.S. Naipaul (1932) - Nobel Prize for Literature in 2001.
5. Hargobind Khorana (1922) - Nobel Prize for Medicine in 1968. 11. Venkatraman Ramakrishnan (1952) - Nobel Prize for Chemistry in
6. Mother Teresa (1910 - 1997) - Nobel Prize for peace in 1979. 2009.

SPORTS AWARDS
The President of India, Pranab Mukherjee on 31 August 2013 conferred the Rajiv Gandhi Khel Ratna Award, Dronacharya Awards, Arjuna
Awards, Dhyan Chand Awards, Tenzing Norgay National Adventure Awards, Maulana Abul Kalam Azad Trophy and Rashtriya Khel Protsahan
Puraskar at a function organised at Rashtrapati Bhawan, New Delhi. Among the awards, the Rajiv Gandhi Khel Ratna Award was given to
Ronjon Sodhi for shooting.
Arjuna Awards 2014 Dronacharya Awards for 2014
S.N. Name Discipline S.N. Name Discipline
1. Abhishek Verma Archery 1. Jose Jacob Athletics
2. V. Diju Badminton 2. N.Lingappa Boxing
3. Geetu Anna Jose Basketball
4. R. Ashwin Cricket Dhyan Chand Awards 2014
5. Jai Bhagwan Boxing S.N. Name Discipline
6. Mamta Pujari Kabaddi 1. K.P.Thakkar Swimming-Diving
7. H.N. Girisha Athletics (Para) 2. Gurmail Singh Hockey
8. Heena Sidhu Shooting 3. Zeeshan Ali- Tennis
9. Saji Thomas Rowing
Tenzing Norgay National Adventure Awards-2012
10. Anaka Alankamony Squash
S.N. Name Discipline
11. Tom Joseph Volleyball
1. Basant Singh Roy Mountaineering
12. Renu Bala Chanu Weightlifting
2. Major Ranveer Singh Jamwal Mountaineering
13. Sunil Kumar Rana Wrestling
3. Lt. Cdr. Abhilash Tomy Sailing
14. Tintu Luka Athletics
4. Paramjeet Singh Siddhu Hang Gliding
15. Anirban Lahiri Golf
5. Prem Singh Mountaineering
6. Hari Ram Mountaineering

Rashtriya Khel Protsahan Puruskar

S.N.Category
1.Community Sports Identification and Nurturing of Budding
Young Talent
2.Financial Support for Sports Excellence
3.Establishment and Management of Sports Academies of
Excellence
4. Employment of Sportspersons and sports Welfare measures.
Rashtriya Khel Protsahan Puruskar, 2013
Dr. U.K. Mishra, Founder and President, National Sports Academy,
Allahabad
Services Sports Control Board
Pullela Gopichand Academy of Badminton, Hyderabad
Petroleum Sports Promotion Board

Maulana Abul Kalam Azad Trophy

S. N. Name Year
1. Guru Nanak Dev Vishwavidyalay, Amritsar 2010-11
2. Punjabi Vishwavidyalay, Patiala 2011-12
3. Punjabi Vishwavidyalay, Patiala 2012-13
4. Punjabi University, Patiala 2013-14

Chapter-17
INDIA & WORLD DEFENCE
INDIAN DEFENCE
 The President of India is the supreme commander of the Indian  Indian Defence System has been divided into three services-
Defence System. Army, Navy and Air Force
 The whole administrative control of the Armed forces lies in the
Ministry of Defence.

97

Eight Public-Sector Undertakings (PSUs) currently function under
the Department of Defence Production and Supplies. They are:
1. Hindustan Aeronautics Limited (HAL): It has 12 factories located
at Bangalore (5 factories), Koraput, Nasik, Karwar, Kanpur,
Lucknow, Barrackpur and Hyderabad. It designs, manufactures
and overhauls various types of aircrafts.
2. Bharat Electronics Limited (BEL): It has 9 factories located at
Bangalore, Ghaziabad, Pune, Machhilipatnam, Taleja
(Maharashtra), Panchkula (Haryana), Kotdwar (Uttaranchal),
Hyderabad and Chennai. It is engaged in the design, development
and manufacturing of electronic equipments.
3. Bharat Earth Movers Limited (BEML) : It has three factories
located at Bangalore, Mysore and Kolar gold fields where heavy
equipments like bulldozers, dumpers, loaders, cranes, etc are
manufactured.
DEFENCE PRODUCTION UNDERTAKINGS
4. Bharat Dynamics Limited (BDL): It is located at Hyderabad to
manufacture guided missiles.
5. Mazgaon Dock Limited (MDL): It is located at Mumbai and its
activities include shipbuilding apart from other works.
6. Garden Reach Shipbuilders and Engineering Limited (GRSE): It
was set-up in Kolkata and is engaged in the construction and
maintenance of warships and auxiliary vessels for Navy and Coast
Guard.
7. Goa Shipyard Limited (GSL): It comprises construction and
repair/refit of ships/vessels.
8. Mishra Dhatu Nigam Limited (MIDHANI): It is located at
Hyderabad and manufactures sophisticated and strategic special
metals and alloys for nuclear energy, aeronautics, space, etc.

PARAMILITARY AND RESERVED FORCES

INDO-Tibetan Border Police(ITBP)
 It was established in 1962, after the Chinese attack. Territorial Army (TA)
 It is basically employed in the Northern borders for monitoring  It was established in 1948.
the borders and also to stop smuggling and illegal immigration.  It is a voluntary, part-time force (between 18 and 35 years), not
professional soldiers, but civilians, who wish to assist in defence
National Security Guards (NSG) of the country.
 It was established is 1984.
 It has been established to counter the surge of militancy in the Home Guards
country.  It was established in 1962, to assist the police in maintaining
 It is a highly trained force which deals with the militants security, to help defence forces and to help local authorities in
effectively. case of any eventuality.

Central Industrial Security Force (CISF) Coast guard

 It was set-up in 1969 after the recommendations of Justice B.  It was set-up in 1978.
Mukherji.  Its objective is to protect the maritime and other national
 Its objective is to monitor the industrial complexes of Central interests in the maritime zones of India.
Government.
Intelligence Bureau (IB)
Assam Rifles  It was set-up in 1920.
 It was established in 1835 and is the oldest paramilitary force in  Its objective is the collect secret information relating to
the country. country’s security.
 Its main objective is to keep vigilance of international borders in  It was originally set-up as Central Special Branch (CSB) in 1987
North East and countering insurgency operations in Arunachal and renamed IB in 1920.
Pradesh, Manipur, Mizoram and Nagaland.
Central Bureau Of Investigation (CBI)
Border Security Force (BSF)  It was established in 1953.
 It was established in 1965.  Its objective is to investigate cases of misconduct by public
 It keeps a vigil over the international borders against the servants, cases of cheating, embezzlement and fraud.
intrusion in the country.  CBI is also entrusted with the investigation of international crime
cases in collaboration with INTERPOL.
Central Reserve Police Force (CRPF)
 It was set-up in 1939. National Crime Recrps’Bureau (NCRB)
 Its main objective is to assist the State / Union Territory Police in  It was established in 1986.
maintenance of law and order.  Its objective is to collect crime statistics at the national level,
 The 88th Battalion of CRPF, known as ‘Mahila Battalion’ information of inter-state and international criminals to help
(commissioned on March 30, 1986) is the world’s first investigation agencies.
paramilitary force comprising entirely of women.
Rapid Action Force (RAF)
National Cadet Corps (NOC)  It was established in 1992.
 It was established in 1948.  Under the operational command of CRPF.
 Its main objective is to stimulate interest among the youth in the  10 battalions of the CRPF have been reoriented for tackling
defence of the country in order to build up a reserve man power communal riots in the country.
to expand armed forces.

DEFENCE RESEARCH IN INDIA

DEFENCE RESEARCH IN INDIA (TOPIC)  DRDO formulates and executes programs of scientific research,
 Defence Research and Development Organisation (DRDO) was design and develop new weapons required by the Armed Forces.
established iii 1958 to provide a solid base to the national
security system.
 Integrated Guided Missile Development Programme (IGMDP)
was launched in 1983 in which the following missiles have been
developed.
AGNI
 The Agni missile is an intermediate-range ballistic missile (IRBM)
developed under the IGMDP by India. It was first tested at the
Interim Test Range in Chandipur in 1989, and is capable of
carrying a conventional payload of 1000 kg or a nuclear
warhead. It consists of one (short range) or two stages
(intermediate range). It is rail and road mobile. It is powered by
solid and/or liquid propellants.
 Agni-III, the third in the Agni series, has a range of 3,500 km-
5500 km. The Agni I has a range of 700—800 km while the Agni-II
as a range of 2,000—2,500 km.
AKASH
 Akash is a medium range surface-to-air missile with an intercept
range of 30 km. It has a launch weight of 720 kg, a diameter of
35 cm and a length of 5.8 metres. Akash flies at supersonic
speed, reaching around Mach 2.5. It can reach an altitude of
18km. It is propelled by a solid fuelled booster stage.
DHANUSH
 The Dhanush is a Naval variant of the Prithvi short-range ballistic
missile intended for launch from surface ships. The Defence
Ministry has said that the 8.53 metre-long and 0.9 meter wide
Dhanush, with a strike range of 350 km and payload capacity of
500 kg, would “soon be operationalised” in the Navy.
TRISHUL
 Trishul is a short range surface-to-air missile. It has a range of 9
km and is fitted with a 5.5 kg warhead. Designed to be used
against low-level (sea skimming) targets at short range, the
system has been developed, to defend naval vessels against
missiles and also as a short range surface to air missile on land.
NAG
 Nag is India’s third generation “Fire-and-forget” anti-tank
missile. It is an all-weather, top attack missile with a range of 3
to 7 km. Separate versions for the Army and the Air Force are
being developed.
PIRTHVI
 The Prithvi missile is the tactical surface-to-surface short-range
ballistic missile (SRBM). It was India’s first indigenously
developed ballistic missile. Development of the Prithvi began in
India’s atomic research (topic)
 India’s journey to atomic energy research started with the
establishment of the Atomic Energy Commission on Aug. 10,
1948, under the chairmanship of Dr. Homi J. Bhabha.
Subsequently, the Department of Atomic Energy (DAE) was
established in 1954 for implementation of atomic energy
programmes.
 Bhabha Atomic Research Centre (BARC) was established in 1957
at Trombay (Maharashtra). It is India’s largest atomic research
centre. Apsara (India’s first atomic reactor), Circus, Zerlina,
Dhruva, Purnima I and II and Kamini (India’s first fast breeder
nuclear reactor, at Kalpakkam) are the BARC’S atomic reactors.
 BARC’S Research Centres: Variable Energy Cyclotron Centre
(Kolkata), High Altitude Research Lab (Gulmarg), Nuclear
Research Lab (Kashmir) and Seismic Station (Gauribidanur,
Karnataka).
99
1983, and it was first test-fired on Feb 25, 1988 from Sriharikota,
Andhra Pradesh.
Variants of Prithvi
 The Prithvi missile project encompassed developing three
variants for use by the Indian Army, Indian Air Force and the
Indian Navy, outlined in the initial project framework of the
IGMDP.
 Prithvi I - Army Version (150 km range with a payload of 1000 kg)
 Prithvi II - Air Force Version (200 km range with a payload of 500
kg)
 Prithvi III or Sagarika - Naval Version (350 km range with a
payload of 500 kg)
SHAURYA
 The Shaurya missile is a short-range surface-to-surface ballistic
missile for use by the Indian Army. Capable of hypersonic
speeds, it has a range of 600 km and is capable of carrying a
payload of one-tonne conventional or nuclear warhead. The
Shaurya missile provides India with a significant second strike
capability. Shaurya missile is a land version of the under-water
launched K-15 missile, Sagarika
 BRAHMOS
 BrahMos is a supersonic cruise missile that can be launched from
submarines, ships, aircraft or land. It is a joint venture between
India’s DRDO and Russia’s NPO Mashinostroeyenia who have,
together formed the BrahMos Aerospace Private Limited. Its
operational range is 290 km.
 The acronym BrahMos is perceived as the confluence of the two
nations represented by two rivers, the Brahmaputra of India and
the Moskva of Russia. It travels at speeds of Mach 2.5 to 2.8 and
is the world’s fastest cruise missile. A hypersonic version of the
missile is also presently under development.
OTHER DEVELOPMENTS (TOPIC)
 The expertise and technology developed through the IGMDP is
also used in the new Anti ballistic missile called the
Exoatmospheric interceptor system which successfully
intercepted a Prithvi-II ballistic missile.
 India became the fourth nation in the world to acquire such a
capability and the third nation to develop it through indigenous
effort. In Dec 2007, India successfully tested the
Endoatmospheric version which destroyed a modified Prithvi-II
missile at 15 km altitude with text-book perfection thereby
completing what is known as Multi-layered Theatrical Wide-area
Air Defence system that can successfully target and destroy all
kinds of Aerial threats from low flying cruise missiles, supersonic
short-range, intermediate-range and intercontinental ballistic
missiles at altitudes of 15 to 50 + km at any angle and azimuth.
INDIA'S ATOMIC RESEARCH
 Indira Gandhi Centre for Atomic Research was established in
1971 and is located at Kalpakkam (Chennai). The centre carries
out research and development of indigenous technology of
sodium cooled fast breeder reactors.
 Centre for Advanced Technology (CAT) was established in 1984
and is located at Indore. The centre carries out research and
development of high technology in fields like lasers, fusion and
acceleration.
 Pokhran Tests: India has so far conducted 6 nuclear test
explosion. The first nuclear explosion was conducted on May 18,
1974 at Pokhran in Rajasthan. The others were conducted on
May 11 and 13, 1998 at Pokhran range only. India’s main
objective of conducting these tests is to use atomic energy for
peaceful purposes.
 Aircraft
Aircraft Origin Type
FIGHTER AIRCRAFT
Mikoyan-Gurevich MiG-21 Soviet Union Interceptor/fighter
Mikoyan MiG-29 Fulcrum (Known as Baaz) Soviet Union Air superiority fighters
Sukhoi Su-30MKI Flanker-H Russia/ India Air superiority fighter
Dassault Mirage 2000 (known as Vajra) France Multi-role fighter
HAL Tejas India Multi-role
GROUND ATTACK BOMBER AIRCRAFT
Mikoyan-Gurevich MiG-27 (Known as Bahadur) Soviet Union Ground Attack
Jaguar IS/IM (Known as Shamsher) France United Kingdom Bomber
Trainer Aircraft HAL HPT-32 Deepak India Basic Trainer (BJT)
HAL HJT-16 Kiran India Intermediate Trainer (IJT)
BAE Hawk United Kingdom Advanced Trainer (AJT)
TRANSPORT AIRCRAFT
Embraer EMB 135 Brazil VIP transport
Boeing Business Jet United States VIP transport
Dornier Do 228 Germany India very Light Transport
Hawker Siddeley HS 748 United Kingdom Light Transport
Antonov An-32 Cline (Known as Sutlej) Soviet Union Medium Transport
Ilyushin Il-76 Candid (Known as Gajraj) Soviet Union Heavy Transport
AEW&C
Il-76 EL/M-2075 Phalcon Russia Israel AEW&C
AIR TANKER AIRCRAFT
Ilyushin Il-78 MKI Russia Israel Il-76
HELICOPTERS
HAL Dhruv India Utility helicopter
Aérospatiale SA 315B Lama France Utility helicopter
Mil Mi-26 Halo Soviet Union Transport helicopter
Mil Mi-8 Soviet Union Transport helicopter
Mi-17 Soviet Union Transport helicopter
Mil Mi-35 Hind-E Soviet Union Attack helicopter
Aérospatiale SA 316B Alouette III France Utility
UNMANNED ARIEL VEHICLE
Lakshya PTA India
IAI Harpy Israel
IAI Heron Israel Heron I/II
IAI Searcher Israel Searcher II
Rustom India

MISSILES OF OTHER COUNTRIES

IRAN Toophan, Saeghe, Fateh, Fajr, Tondar, Ghadr, Oghab, Samid, Qiam, Shahab, Sayyad, Shahin, Noor Kowsar Silkworm, Hoot,
Saegheh, Zelzal, Ashoura, Sajjil, Nasr
ISRAEL Arrow, Barak, Delilah, Gabriel, Jericho, Lahat, Nimrod, Popeye, Python, Shavit, Fateh
PAKISTAN SRBM - Hatf, Abdali, Ghaznavi; MRBM/IRBM – Ghauri, Shaheen Cruise Missile – Babur; Anti Tank – Baktar-Shikan
United ASRAAM, Bloodhound Surface-to-air, Blowpipe Man portable Surface-to-air, Blue Steel Nuclear "Stand Off Bomb", Blue Streak
Kingdom Blue Water - surface to surface nuclear, Brakemine WWII SAM project, Brimstone, Fairey Fireflash Air-to-air, Fairey Stooge anti-
ship missile, Fire Shadow, Firestreak Air-to-air, Green Cheese, Javelin Surface-to-air, Malkara (joint Australian/British), MBDA
Meteor (European), Rapier Surfaceto-air, Red Dean, Red Hebe, Red Top Air-to-air, Sea Cat, Sea Dart, Sea Eagle Sea Skua, Sea Slug
Surface-to-air, Sea Wolf Surface-to-air, Skybolt ALBM, Skyflash, Starburst, Starstreak, Storm Shadow (British-French), Swingfire
Ground to ground, anti-tank, Thunderbird, Tigercat, UB.109T - cruise missile, Vickers Vigilant
USA Matador, Falcom, Jupiter, Terrier, Corporal, Sidewinder, Bomarc, Sparrow, Regulus, Nike-Ajax, Quail, Maverick, Hornet, Cardinal,
Kingfisher, Walleye, Viper, Blueye, Dragon, Posiedon, Firebolt, Titan, Polaris, Sergeant, Minuteman, Firefly, Jayhawk, Skybolt,
Redeye, Overseer, Taurus, Condor, Shelduck, Firebee, Trident, Peacekeeper, Hellfire, Fireband, Roland, Aquila, Thunderbolt,
Bulldog, Shrike, Subrock, Mauler, Minuteman, Hawk, Atlas, Thor, Talos, Bullpup, Sergeant, Rpadrunner, Redhead, Spartan,
Shillelagh, Have Nap, Taurus

SUBMARINES/ FRIGATES/DESTROYERS/AIRCRAFT CARRIER

SHIPS

100
Chakra Charlie Class Nuclear Submarines
Arihant Nuclear Powered Ballistic Missile
Submarine
Sindhuraj, Sindhuvir, Sindhushashtra, Sindhuratna, Sindhukesari, Sindhuvijay, Sindhughosh Class of Submarine
(Cable of Launching BrahMos and
Klub
Akula, Amur Nuclear Submarine
Talwar Class(Teg, Tarkash, Trikand, Trishul, Talwar, Tabar), Shivalik Class (Satpura, Shahyadri), Frigate
Brahmaputra Class (Brahmaputra, Betwa, Beas), Godawri Class (Godawri, Ganga, Gomati), Nilgiri
Class(Vindhyagiri, Taragiri)
Kamorta, Rajput Class, Kolkota Class, Delhi Class, Kochi Class , Chennai Class Destroyers
Vikramaditya Aircraft Carrier
Salva Class Cruiser
Sukanya Class Patrol Craft
SukKhoi, Dassault, MIG-29 Nuclear Cabable Aircraft
Viraat Centaur Class (Aircraft Carrier)
Shishumaar, Shankush, Shalki, Shankul Shishumaar Class
Vagli Vela or Kalvari Class Submarines
Kora Class (Kora, Kilch, Kulish, Karmuk), Khukri Class (Khukri, Kuthar, Kirpan, Khanjar), Veer (Veer, Corvettes
Nirbhik, Nipat, Nishank, Nirghat, Vibhuti, Vipul, Vinaash, Vidyut, Nashak, Prabal, Pralay), Abhay Class
(Abhay, Agray, Akshay, Ajay)
Austin Class (Jalashwa), Shardul Class (Shardul, Kesari, Airavat), Magar Class (Magar, Ghariyal), Amphibious Warfare Ships
Kumbhir Class (Cheetah, Kumbhir, Maheesh, Guldar)
Vikrant Aircraft Carrier
Scorpene Submarine
Sagar Dhwani Research Vessel
Sandhyak Class (Sandhyak, Nirdeshak, Nirupak, Investigator, Jamuna, Sutlej, Darshak, Sarvekshak) Surveyor Ship
Sukanya Class (Sukanya, Subhadra, Suvarna, Savitri, Sharda, Sujata), Bangaram Class, Car Nicobar Patrol Ships
class
Kondul and Cankarso Water Jet Propelled Fast Attack
Aircraft

INDIA NUCLEAR CAPABLE MISSILES

Name Class Range Status
Agni-I SRBM 700 km Operational
Agni-II MRBM 2,000 km - 3,000 km Operational
Agni-III IRBM 3,500 km Inducted
Agni-IV MRBM 3,000 km - 3,800 km Induction by 2014-15
Agni-V ICBM 5,000 km - 6,000 km Under development
Agni-VI ICBM 5,200 km - 10,000 km Under development
Dhanush SRBM 350 km Developed but not used
Nirbhay Subsonic Cruise Missile 1,000 km Under development
Brahmos I Supersonic Cruise Missile 290 km Operational
Brahmos II Hypersonic Cruise Missile 290 km Under development
P-70 Ametist Anti-shipping Missile 65 km Operational
P-270 Moskit Supersonic Cruise Missile 120 km Operational
Popeye ASM 78 km Operational
Prithvi-I SRBM 150 km Operational
Prithvi-II SRBM 250 km Operational
Prithvi-III SRBM 350 km Operational
Sagarika (missile) SLBM 700 km - 2,200 km Awaiting Arihant SSBN's
Shaurya TBM 700 km - 2,200 km Operational

OTHER POINTS TO PONDER UPON

1. Nirbhay is a long range (1000 km) subsonic cruise missile being developed in India by the Defence Research and Development Organisation.
2. Indian Navy successfully test-fired the 290-km range Bramhos Supersonic Cruise Missile, capable of carrying a conventional warhead of 300
kg, from a warship off the Goa coast.
3. Pakistan test fired cruise missile Babur with a range of 700km
4. Iran has tested Fateh 110 missiles (Range - 300 km).
5. Naval Offshore Patrol Vessel INS Saryu inducted into Indian Navy.
6. Cochin Shipyard launched Aadesh the First Fast Patrol Vessel for Coast Guard..
7. K-5 ballistic missile (strike range around 1500 kms) successfully test fired from an underwater platform in Bay of Bengal.
8. India Successfully Test Fired K-15 Ballistic Missile in Bay of Bengal
9. Indian Army gets its first indigenously-made Rudra attack chopper.
10. ISRO has launched Indo-French satellite 'SARAL'(410-kg) with the Polar Satellite Launch Vehicle PSLV-C20 from Sriharikota. It will support in
marine meteorology and sea state forecasting, operational oceanography, seasonal forecasting, climate monitoring, ocean, earth system and
climate research

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 Chapter-18
DEVELOPMENTAL SCHEMES BY GOVT.
S.N. Programme/Plan/Institution Year Objective/ Description
1. Community Development Programme (CDP) 1952 Overall development f rural areas with people’s participation.
2. Intensive Agriculture Development 1960-61 To provide loan, seeds, fertilizer tools to the farmers.
Programme(IADP)
3. Intensive Agriculture Area Programme (IAAP) 1964-65 To develop the special harvests
4. Credit Authorisation Scheme (CAS) November A Scheme of Qualitative credit control of Reserve Bank
1965
5. High Yielding Variety Programme (HYVP) 1966-67 To increase productivity of food grains by adopting latest varieties of
inputs for crops
6. Indian Tourism Development Corporation October To arrange for the construction of Hotels and Guest houses a various
(ITDC) 1966 of inputs for crops
7. Green Revolution 1966-67 To increase the food grains, specially wheat production
8. Nationalisation of 14 Banks July 1969 To provide loans for agriculture, rural development and other
priority sectors
9. Rural Electrification Corporation July 1969 Electrification in rural areas
10. Housing and Urban Development Corporation April 1970 Loans for the development of housing and provision of resources for
technical assistance
11. Scheme of Discriminatory Interest Rate April 1972 To provide loan to the weaker sections of the society at a
concessional interest rate of 4%
12. Employment Guarantee Scheme of 1972-73 To assist the economically weaker sections of the rural society
Maharashtra
13. Accelerated Rural Water Supply Programme 1972-73 For providing drinking water in the villages
(ARWSP)*
14. Deought-Prone Area Programme (DPAP) 1973 To try an expedient for protection from drought by a achieving
environmental balance and by developing the ground water
15. Crash Scheme for Rural Employment (CSRE) 1972-73 For rural employment
16. Marginal Farmer and Agriculture Labour 1973-74 For technical and financial assistance to marginal and small farmers
Agency (MFALA) and agricultural labour
17. Small Farmer Development Agency (SFDA) 1974-75 For technical and financial assistance to small farmer
18. Command Area Development Programme 1974-75 To ensure better and rapid utilization of irrigation capacities of
(CADP) medium and large projects
19. Twenty Point Programme (TPP) 1975 Poverty eradication and raising the standard of living
20. National Institution of Rural Development 1977 Training, investigation and advisory organization for rural
development

21. Desert Development Programme (DDP) 1977-78 For controlling the desert expansion and maintaining environmental
balance
22. Food for Work Programme 1977-78 Providing food grains o labour for the work of development
23. Antyodaya Yojana 1977-78 To make the poorest families of the village economically
independent (only in Rajasthan State)
24. Training Rural Youth for SelfEmployment August 15, Programme of training rural youth for self-employment
(TRYSEM) 1979
25. Integrated Rural Development Programme October 2, All-round development of the rural poor through a programme of
(IRDP) 1980 asset endowment for self-employment
26. National Rural Employment Programme 1980 To provide profitable employment opportunities to the rural poor
(NREP)
27. Development of Women and Children in Rural September To provide suitable opportunities of self-employment to the women
Areas 1982 belonging to the rural families who (DWCRA) are living below the
poverty line
28. Rural Landless Employment Guarantee August 15, For providing employment to landless and labourers
Programme (RLEGP) 1983
29. Self-Employment to the Educated Unemployed 1983-84 To provide financial and technical assistance for self-employment
Youth (SEEUY)
30. Farmer Agriculture Service Centre’s (FASC’s) 1983-84 To popularize the use of improved agricultural instruments and tool
kits

31. Agriculture and Rural Debt Relief Scheme 1990 To exempt bank loans up to Rs. 10,000 of rural artisans and weavers
(ARDRS)
32. Scheme of Urban Micro Enterprises (SUME) 1990 To assist the urban poor people for small enterprise
33. Scheme of urban Wage Employment (SUWE) 1990 To provide wages employment after arranging the basic facilities for
poor people in the urban areas where population is less than one
lakh
34. Scheme of Housing and Shelter up-gradation 1990 To provide employment by the means of shelter up-gradation in the
(SHASU) urban areas where population is between 1 to 20 lakhs
35. National Housing and Bank Voluntary Deposit 1991 To utilize black money for constructing low cost housing for the poor
Scheme

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36. National Renewal Fund (NRF) February To protect the interest of the employees of Public Sector
1992
37. Supply of Improved Toolkits to Rural Artisans July 1992 To supply modern toolkits to the rural craftsmen except the weavers,
tailors, embroiders and tobacco labourers who are living below the
poverty line
38. Employment Assurance Scheme (EAS) October 2, To provide employment of at least 100 days in a year in villages
1993
39. Members of Parliament Local Area December To sanction Rs. 1 crore per year to every Member of Parliament for
Development Scheme (MPLADS) 23, 1993 various development works in their respective areas through DM of
the district
40. Scheme of Infrastructural Development in 1993-94 To provide capital through special institutions for water supply,
Mega Cities (SIDMC) sewage, drainge, urban transportation, land development and
improvement of slum projects undertaken in Mumbai, Kolkata,
Bangalore, Chennai and Hyderabad

41. Scheme of Integrated Development of Small Sixth Five To provide resources and create employment in small and medium
and Medium Towns Year Plan towns for prohibiting the migration of population from rural areas to
big cities
42. District Rural Development Agency (DRDA) 1993 To provide financial assistance for rural development
43. Mahila Samridhi Yojana 2 October, To encourage the rural women to deposit in Post Office Saving
1993 Account
44. Child Labour Eradication Scheme August 15, To shift child labour from hazardous industries to schools
1994
45. Prime Minister’s Integrated Urban Poverty November To attack urban poverty in an integrated manner in 345 town having
Eradication Programme (PMIUPEP) 18, 1995 population between 50,000 to 1 lakh
46. Group Life Insurance Scheme in Rural Areas 1995-96 To provide insurance facilities to rural people on low premium
47. National Social Assistance Programme 1995 To assist people living below the poverty line
48. Ganga Kalyan Yojana 1997-98 To provide financial assistance to farmers for exploring and
developing ground and surface water resources
49. Kasturba Gandhi Education Scheme August 15, To establish girls schools in districts having low female literacy rate
1997
50. Swarna Jayanti Shahari Rozgar Yojana (SJSRY) December, To provide gainful employment to urban unemployed and under
1997 employed poor through selfemployment or wage employment

51. Bhagya Shree Bal Kalyan Policy Oct. 19, 1998 To uplift the girls conditions
52. Rajrajeshwari Mahila Kalyan Yojana Oct. 19, 1998 To provide insurance protection to women
53. Annapurna Yojana March, 1999 To provide 10 kg. food grains to senior citizens (who did not get
pension)
54. Swarna Jayanti Gram Swarozgar Yojana (SJGSY) April 1999 For eliminating rural poverty and unemployment and promoting
selfemployment
55. Samagra Awas Yojana 1999-2000 For providing shelter sanitation and drinking water
56. Jawahar Gram Samridhi Yojana (JGSY) April 1999 Creation of demand driven community village infrastructure
57. Jan Shree Bima Yojana Aug. 10, Providing Insurance Security to people living poverty line
2000
58. Pradhan Mantri Gramodaya Yojana 2000 To fulfill basic requirements in rural areas
59. Antyodaya Anna Yojana Dec. 25, To provide food security to poor
2000
60. Ashraya Bima Yojana June 2001 To provide compensation to labourers who have lost their
employment

61. Pradhan Mantri Gram Sadak Yojana (PMGSY) Dec. 25, To link all villages with Pacca Road
2000
62. Khetihar Mazdoor Bima Yojana 2001-02 Insurance of Landless Agricultural workers
63. Shiksha Sahyog Yojana 2001-02 Education of Children Below Poverty Line
64. Sampurna Gramin Rozgar Yojana Sept. 25, Providing employment and food security
2001
66. Valmiki Ambedkar Awas Yojana (VAMBAY) Dec. 2, 2001 Constructing Slum houses in urban areas.
67. National Slum Development Programme Aug. 1996 Development of Urban Slums
68. Social Security Pilot Scheme Jan. 23, 2004 Scheme for labours of unorganized sector for providing family
pension, insurance and medical
69. Vande Materam Scheme Feb. 9, 2004 Major initiative in public-private partnership during pregnancy
checkup
70. National Food for Work Programme Nov. 14, Programme to intensify the generation of supplementary wage
2004 employment.
71. Janani Suraksha Yojana April 12, Providing care to expectant mothers.
2005
72. Bharat Nirman Yojana Dec. 16, Development of Rural Infrastructure including six components :
2005 Irrigation, Water Supply, Housing, Road, Telephone and Electricity
73. National Rural Employment Guarantee Scheme Feb.2, 2006 To provide at least 100 days wage employment in rural areas.

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74. Swawlamban Sep. 26, 2010 New Pension Scheme for unrecognised sector
75. Swabhiman February 10, Financial Inclusion
2011

Chapter-19
LIST OF IMPORTANT POWER PLANT
NUCLEAR ENERGY
Power Station Location District State
Narora Atomic Power Station Narora Bulandshahr Uttar Pradesh
Rajasthan Atomic Power Station Rawatbhata Chittorgarh Rajasthan
Tarapur Atomic Power Station Tarapur Thane Maharashtra
Kakrapar Atomic Power Station Kakrapar Surat Gujarat
Kudankulam Nuclear Power Plant Kudankulam Tirunelveli Tamilnadu
Madras Atomic Power Station Kalpakkam Kancheepuram Tamilnadu
Kaiga Nuclear Power Plant Kaiga Uttara Kannada Karnataka
Madras Atomic Power Station Kalpakkam Kancheepuram Tamil Nadu
Proposed Plant - Fatehabad Haryana

THERMAL POWER PLANTS

Power Station Location District State
Rajiv Gandhi Super Thermal Power Station Khedar Hisar Haryana
Guru Gobind Singh Super Thermal Power Plant Ghanauli Rupnagar Punjab
Suratgarh Super Thermal Power Plant Suratgarh Sri Ganganagar Rajasthan
Giral Lignite Power Plant Thumbli Barmer Rajasthan
Singrauli Super Thermal Power Station Shaktinagar Sonebhadra Uttar Pradesh
Ukai Thermal Power Station Ukai dam Tapi Gujarat
Wanakbori Thermal Power Station Wanakbori Kheda Gujarat
Sikka Thermal Power Station Jamnagar Jamnagar Gujarat
Dhuvaran Thermal Power Station Khambhat Anand Gujarat
Satpura Thermal Power Station Sarni Betul Madhya Pradesh
Chandrapur Super Thermal Power Station Urjanagar Chandrapur Maharastra
Vindhyachal Super Thermal Power Station Vindhya Nagar Sidhi Madhya Pradesh
Korba Super Thermal Power Plant Jamani Palli Korba Chattisgarh
Sipat Thermal Power Plant Sipat Bilaspur Chattisgarh
Sabarmati Thermal Power Station Ahmedabad Gujarat
Mundra Thermal Power Station Mundra Kutch Gujarat
Dahanu Thermal Power Station Dahanu Thane Maharastra
Bellary Thermal Power Station Kudatini Bellary Karnataka
Simhadri Super Thermal Power Plant Simhadri Visakhapatnam Andhra Pradesh
Patratu Thermal Power Station Patratu Jharkhand
Kahalgaon Super Thermal Power Station Kahalgaon Bhagalpur Bihar
Farakka Super Thermal Power Station Nagarun Murshidabad West Bengal
Talcher Super Thermal Power Station Kaniha Angul Orissa

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 HYDROELECTRIC POWER PLANT Linganamakki Dam Karnataka
STATION COMMUNITY Idukki Kerala
Tehri Dam Uttarakhand Bansagar Dam Madhya Pradesh
Srisailam Dam Andhra Pradesh Bargi Dam Madhya Pradesh
Nagarjunasagar Andhra Pradesh Madikheda Dam Madhya Pradesh
Sardar Sarovar Gujarat Omkareshwar Madhya Pradesh
Baspa-II Himachal Pradesh Indira Sagar Madhya Pradesh
Nathpa Jhakri Himachal Pradesh Loktak Manipur
Bhakra Dam Punjab Khuga Dam Manipur
Dehar Himachal Pradesh Koyna Maharashtra
Baira Suil Himachal Pradesh Mulshi Dam Maharashtra
Chamera-I Himachal Pradesh Jayakwadi Dam Maharashtra
Chamera-II Himachal Pradesh Kolkewadi Dam Maharashtra
Pong Himachal Pradesh Rangeet Sikkim
Uri Hydroelectric Dam Jammu & Kashmir Teesta-V Sikkim
Dulhasti Jammu & Kashmir Tanakpur Uttarakhand
Salal Jammu & Kashmir Dhauliganga-I Uttarakhand
Sardar Sarovar Gujarat Loharinag Uttarakhand
Sharavathi Karnataka Luhri Dam Himachal Pradesh
Kalinadi Karnataka Vishnugad-Pipalkoti Uttarakhand

WIND POWER ENERGY

Power Plant Producer Location State
Vankusawade Wind Park Suzlon Energy Ltd. Satara Dist. Maharashtra
Sipla CLP Wind Farms (India) Private Ltd Jaisalmer Rajasthan
Samana CLP Wind Farms (India) Private Ltd Jamnagar Gujarat
Theni CLP Wind Farms (India) Private Ltd Tamil Nadu
Saundatti CLP Wind Farms (India) Private Ltd Belgaum Karnataka
Khandke CLP Wind Farms (India) Private Ltd Ahmednagar Maharashtra
Narmada CLP Wind Farms (India) Private Ltd Nallakonda Andhra Pradesh

Harapanahalli CLP Wind Farms (India) Private Ltd. Davanagere Karnatka

Cape Comorin Aban Loyd Chiles Offshore Ltd. Kanyakumari Tamil Nadu
Kayathar Subhash Subhash Ltd. Kayathar Tamil Nadu
Ramakkalmedu Subhash Ltd. Ramakkalmedu Kerala
Muppandal Wind Muppandal Wind Farm Muppandal Tamil Nadu
Gudimangalam Gudimangalam Wind Farm Gudimangalam Tamil Nadu
Puthlur RCI Wescare (India) Ltd. Puthlur Andhra Pradesh
Lamda Danida Danida India Ltd. Lamda Gujarat
Chennai Mohan Mohan Breweries & Distilleries Ltd. Chennai Tamil Nadu
Jamgudrani MP MP Windfarms Ltd. Dewas Madhya Pradesh
Jogmatti BSES BSES Ltd. Chitradurga Dist Karnataka
Perungudi Newam Newam Power Company Ltd. Perungudi Tamil Nadu
Kethanur Wind Farm Kethanur Wind Farm Kethanur Tamil Nadu
Hyderabad APSRTC Andhra Pradesh State Road Transport Corp. Hyderabad Andhra Pradesh
Muppandal Madras Madras Cements Ltd. Muppandal Tamil Nadu
Poolavadi Chettinad Chettinad Cement Corp. Ltd. Poolavadi Tamil Nadu
Shalivahana Wind Shalivahana Green Energy. Ltd. Tirupur Tamil Nadu
Note: India has the world's fifth largest wind power industry, with an installed wind power capacity of 9,587 MW.

Chapter-20
CURRENT AFFAIRS SNAPSHOT

Current RBI Policy & Reserve Rates:

1. Repo Rate under LAF
2. Reverse Repo Rate under LAF
3. Cash Reserve Ratio(CRR)
4. Statutory Liquidity Ratio(SLR)
5. Marginal Standing Facility (MSF)
6. Bank Rate
7.50% (w.e.f. 07/04/2015)
6.50% (w.e.f. 07/04/2015)
4% (w.e.f 07/04/2015)
21.50% (w.e.f. 07/04/2015)
8.50% (w.e.f. 07/04/2015)
8.50% (w.e.f. 07/04/2015)

BANKING IN INDIA
 Reserve Bank of India (RBI) was established in 1935 and  Sir Osborne Smith was the first Governor of the Reserve Bank of
Nationalized in 1949. India
 CD Deshmukh was the first Indian Governor of RBI.

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 Savings account system in India was started by Presidency Bank, 
in 1833.
 Cheque system was first introduced by Bengal Bank which was
established in 1784.
 Allahabad Bank is the oldest existing public sector bank in India.
 Hongkong and Shanghai Banking Corporation (HSBC) introduced
first time ATM in India in 1987, Mumbai.
 Bank of India is the first Indian Bank to open overseas branch. It
established a branch in London in 1946.
 Central Bank of India was the first public bank to introduce credit 
card.
 Central Bank of India is the first commercial bank which was
managed by Indians.
 ICICI Bank was the first Indian Bank to provide internet banking
facility.
 ICICI Bank was the first Bank to provide Mobile ATM.
 Bank of Baroda has the maximum number of overseas branches.
 SBI (State Bank of India) has the total number of maximum
branches and holds 2 position in the world.
India's first "talking" Automated Teller Machine (ATM) launched
by Union Bank of India (UBI) for visually impaired was launched
in Ahmedabad (Gujarat).
 The National Payments Corporation of India (NPCI) launches
India’s first rural bank ATM card with a regional rural bank in
Varanasi
Note: NPCI launched the first Gramin bank ATM card with the
Kashi Gomti Samyut Gramin Bank in association with Union Bank
of India in Varanasi. The card is called RuPay Gramin Card.
India's first non-bank owned ATM opens in Maharashtra: Tata
Communications Payments Solutions Ltd, a wholly owned
subsidiary of Tata Communications Ltd, which unveiled the ATM
at Chandrapada in Thane district, plans to roll out 15,000 such
ATMs by 2016.
Note: Private sector lender Federal Bank announced its tie-up
with Tata Communications Payment Solutions Ltd as the sponsor
bank to deploy White Label ATMs (WLAs).

ATMs: (Automated Teller Machine)

The ATM debit cards, credit cards and prepaid cards (that permit cash withdrawal) issued by banks can be used at ATMs for various
transactions.

Use of ATMs of Other Banks

5 free transactions are permitted per month (inclusive of financial and/or non-financial) at other bank ATMs for Savings Bank Account holders.
 For transaction beyond this minimum number of transactions, banks charge
 maximum of Rs 20/ - per transaction.

PERSONAL IDENTIFICATION NUMBER (PIN)

A Personal Identification Number is a secret numeric password shared between user and a system that can be use to authenticate the user to
the system.
Reconciliation of failed transactions at ATMs:
 The time limit for resolution of customer complaints by the issuing banks shall stand reduced from 12 working days to 7 working days
from the date of receipt of customer complaint.
 Accordingly, failure to recredit the customer’s account within 7 working days of receipt of the complaint shall entail payment of
compensation to the customer @ Rs. 100/- per day by the issuing bank.
 Any customer is entitled to receive such compensation for delay, only if a claim is lodged with the issuing bank within 30 days of the date
of the transaction. i
 All disputes regarding ATM failed transactions shall be settled by the issuing bank and the acquiring bank through the ATM system
provider only.
 If the course of action for the customer complaint is not taken by his/her bank within the stipulated time than customer can take recourse
to the local Banking Ombudsman in such situations.

IFSC (INDIAN FINANCIAL SYSTEM CODE)
1. Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system.
2. This is an 11 digit code with the first 4 alpha characters representing the bank, The 5th character is 0 (zero).and the last 6 characters
representing the bank branch.
3. IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to
the concerned banks / branches.
4. For ex: SBIN0015986 :
a. First 4 characters SBIN – refers to State Bank of India.
b. 0 is a control number.
c. Last six characters (015986) represent the SBI branch Jail Road, Hari Nagar New Delhi.

MICR
Stands for Magnetic Ink Character Recognition. MICR Code is a numeric code which uniquely identifies a bank branch participating in the ECS
Credit scheme. MICR code consists of 9 digits e.g 400229128
 First 3 digits represent the city (400)
 Next 3 digits represent the bank (229)
 Last 3 digits represent the branch (128)
 The MICR Code allotted to a bank branch is printed on the MICR band of cheque leaves issued by bank branches.

Cheque Truncation
1. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route
to the drawee bank branch.
2. In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information
like data on the MICR band, date of presentation, presenting bank, etc.

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3. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-
related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-
related problems, thus benefitting the system as a whole.

Cheque Vs Demand Draft

Cheque: Cheuqe is a negotiable instrument instructing a bank to pay a specific amount from a specific account held in the maker/depositor
name with that Bank.
Demand Draft: A demand draft is an instrument used for effecting transfer of money. It is a negotiable instrument.
Difference b/w a Cheque and a demand draft
 A cheque is issued by an individual whereas a demand draft is issued by a bank.
 A cheque is drawn by an account holder of a bank, whereas a draft is drawn by one branch of a bank on another branch of the same bank.
 In a cheque, the drawer and the drawee are different persons. But in a draft both the drawer and the drawee are the same bank.
 A cheque is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has not be precisely defined in the NI Act.
 A Cheque can be dishonored for want of sufficient balance in the account. Whereas a draft cannot be dishonoured.Hence there is
certainty of the payment in the case of a demand draft.
 Payment of a cheque can be stopped by the drawer of the cheque, whereas, the payment of a draft cannot be stopped.
 A cheque can be made payable either to a bearer or order. But a demand draft is always payable to order of a certain person.
Bancassurance
The sale of insurance and other similar products through a bank. This can help the consumer in some situations; for example, when a bank
requires life insurance for those receiving a mortgage loan the consumer could purchase the insurance directly from the bank. The bank
insurance model (BIM), also sometimes known as bancassurance, is the partnership or relationship between a bank and an insurance company
whereby the insurance company uses the bank sales channel in order to sell insurance products, an arrangement in which a bank and an
insurance company form a partnership so that the insurance company can sell its products to the bank's client base.

BANKING OMBUDSMAN SCHEME 2006

 The Banking Ombudsman Scheme enables an expeditious and
inexpensive forum to bank customers for resolution of
complaints relating to certain services rendered by banks.
 The Banking Ombudsman is a senior official appointed by the
Reserve Bank of India to redress customer complaints against
deficiency in certain banking services.
 All Scheduled Commercial Banks, Regional Rural Banks and
Scheduled Primary Co-operative Banks are covered under the
Scheme.
Grounds of complaints: The Banking Ombudsman can receive and
consider any complaint relating to the following deficiency in banking
services (including internet banking):
 non-payment or inordinate delay in the payment or collection of
cheques, drafts, bills etc.;
 failure to issue or delay in issue of drafts, pay orders or bankers’
cheques;
 non-adherence to prescribed working hours ;
 failure to provide or delay in providing a banking facility (other
than loans and advances) promised in writing by a bank or its
direct selling agents;
 refusal to open deposit accounts without any valid reason for
refusal;
 Levying of charges without adequate prior notice to the
customer;
 non-observance of Reserve Bank guidelines on engagement of
recovery agents by banks;
 and any other matter relating to the violation of the directives
issued by the Reserve Bank in relation to banking or other
services.
Complaints can be made when:
 One can file a complaint before the Banking Ombudsman if the
reply is not received from the bank within a period of one month
after the bank concerned has received one s representation, or
the bank rejects the complaint, or if the complainant is not
satisfied with the reply given by the bank.
 period of more than one year has not lapsed after receipt of
bank reply.
 the complaint is not for issues already settled/dealt with
Ombudsman or for which proceedings before court, tribunal or
arbitrator or any other forum is pending or a decree or Award or
order has been passed.
 the complaint is within limitation period under Indian Limitation
Act 1963.
Procedure for filing the complaint: One can file a complaint with the
Banking Ombudsman simply by writing on a plain paper. One can also
file it online or by sending an email to the Banking Ombudsman.
Where can one lodge his/her complaint: One may lodge his/ her
complaint at the office of the Banking Ombudsman under whose
jurisdiction, the bank branch complained against is situated.
Other Important Points
 The complainant can be filed by one s authorized representative
(other than an advocate).
 The Banking Ombudsman does not charge any fee for filing and
resolving customers’ complaints.
 The amount, if any, to be paid by the bank to the complainant by
way of compensation for any loss suffered by the complainant is
limited to the amount arising directly out of the act or omission
of the bank or Rs 10 lakhs, whichever is lower.
 The Banking Ombudsman may award compensation not
exceeding Rs 1 lakh to the complainant only in the case of
complaints relating to credit card operations for mental agony
and harassment.
 If a complaint is not settled by an agreement within a period of
one month, the Banking Ombudsman proceeds further to pass
an award. Before passing an award, the Banking Ombudsman
provides reasonable opportunity to the complainant and the
bank, to present their case.
 If one is not satisfied with the decision passed by the Banking
Ombudsman, one can approach the appellate authority against
the Banking Ombudsmen’s decision. Appellate Authority is
vested with a Deputy Governor of the RBI.
 If one is aggrieved by the decision, one may, within 30 days of
the date of receipt of the award, appeal against the award
before the appellate authority.
 The appellate authority may, if he/ she is satisfied that the
applicant had sufficient cause for not making an application for
appeal within time, also allow a further period not exceeding 30
days.
BASIC SAVING BANK DEPOSIT ACCOUNT

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 Under the guidelines issued on August 10, 2012 by RBI: Any
individual, including poor or those from weaker section of the society,
can open zero balance account in any bank. BSBDA guidelines are
applicable to "all scheduled commercial banks in India, including
foreign banks having branches in India".
All the accounts opened earlier as 'no-frills' account should be
renamed as BSBDA. Banks are required to convert the existing 'no-
frills' accounts’ into 'Basic Savings Bank Deposit Accounts'.
The 'Basic Savings Bank Deposit Account' should be considered as a
normal banking service available to all customers, through branches .
The aim of introducing 'Basic Savings Bank Deposit Account' is very
much part of the efforts of RBI for furthering Financial Inclusion
objectives.
Main Points of The BSBDA
 An individual is eligible to have only one 'Basic Savings Bank
Deposit Account' in one bank.
 Holders of 'Basic Savings Bank Deposit Account' will not be
eligible for opening any other savings account in that bank. If a
customer has any other existing savings account in that bank, he
/ she will be required to close it within 30 days from the date of
opening a 'Basic Savings Bank Deposit Account'.
Note: While opening the BSBDA customers’ consent in writing be
obtained that his existing non-BSBDA Savings Banks accounts will
be closed after 30 days of opening BSBDA and banks are free to
close such accounts after 30 Days.
 One can have Term/Fixed Deposit, Recurring Deposit etc.,
accounts in the bank where one holds 'Basic Savings Bank
Deposit Account'.
 Banks are advised not to impose restrictions like age and income
criteria of the individual for opening BSBDA.
I. A micro enterprise is an enterprise where investment in plant
and machinery does not exceed Rs. 25 lakh. and investment in
equipment does not exceed Rs. 10 lakh;
II. A small enterprise is an enterprise where the investment in plant
and machinery is more than Rs. 25 lakh but does not exceed Rs.
5 crore and the investment in equipment is more than Rs.10 lakh
but does not exceed Rs. 2 crore.
III. A medium enterprise is an enterprise where the investment in
plant and machinery is more than Rs.5 crore but does not
exceed Rs.10 crore. and the investment in equipment is more
than Rs. 2 crore but does not exceed Rs. 5 crore.
Status of lending by banks to this sector?
Bank loans up to Rs.5 crore per borrower / unit to Micro and Small
Enterprises engaged in providing or rendering of services and defined
in terms of investment in equipment under MSMED Act, 2006.
ROLE OF BANKING CODES AND STANDARD BOARD OF
INDIA (BCSBI) FOR MSES
1. The Banking Codes and Standard Board of India (BCSBI)
constituted a Working Group comprising members from select
banks, Indian Banks Association, Rural Planning & Credit
Department of Reserve Bank of India to formulate a Banking
Code for SME Customers.
2. The Banking Codes and Standard Board of India (BCSBI) has
formulated a Code of Bank's Commitment to Micro and Small
Enterprises.
3. This is a voluntary Code, which sets minimum standards of
banking practices for banks to follow when they are dealing with
Micro and Small Enterprises (MSEs) as defined in the Micro Small
and Medium Enterprises Development (MSMED) Act, 2006.
 There is no requirement for any initial deposit for opening a
BSBDA.
 Banks should offer the ATM Debit Cards free of charge and no
Annual fee should be levied on such Cards.
 In BSBDA, banks are required to provide free of charge minimum
four withdrawals, through ATMs and other mode including
RTGS/NEFT/Clearing/Branch cash withdrawal/transfer/internet
debits/standing instructions/EMI etc
 The Uniform rate of interest rates set by individual banks are
applicable on the domestic savings deposit will be determined
on the basis of end-of-day balance in the account.
 The normal saving bank account can be converted into BSBDA at
the request of customer.
BSBDA-Small Accounts would be subject to the following conditions
i. Total credits in such accounts should not exceed 1 lakh
rupees in a year.
ii. Maximum balance in the account should not exceed 50,000
Rs at any time
iii. The total of debits by way of cash withdrawals and transfers
will not exceed 10,000 rupees in a month
iv. Foreign remittances cannot be credited to Small Accounts
without completing normal KYC formalities
v. Small accounts are valid for a period of 12 months initially
which may be extended by another 12 months if the person
provides proof of having applied for an Officially Valid
Document.
vi. Small Accounts can only be opened at CBS linked branches
of banks or at such branches where it is possible to
manually monitor the fulfillments of the conditions.
MICRO, SMALL AND MEDIUM ENTERPRISES
Priority Sector Lending: Priority sector lending include only those
sectors as part of the priority sector, that impact large sections of the
population, the weaker sections and the sectors which are
employment-intensive such as agriculture, and Micro and Small
enterprises.
Priority Sector: Priority sector refers to those sectors of the economy
which may not get timely and adequate credit in the absence of this
special dispensation.
Typically, these are small value loans to farmers for agriculture and
allied activities, micro and small enterprises, poor people for housing,
students for education and other low income groups and weaker
sections.
Categories under priority sector:
1. Agriculture, 2. Micro and Small Enterprises, 3. Education, 4.
Housing, 5. Export Credit, 6. Others.
Loan limit for education under priority sector: Loans to individuals
for educational purposes including vocational courses upto `10 lakh
for studies in India and `20 lakh for studies abroad are included under
priority sector.
Limit for housing loans under priority sector: Loans to individuals up
to `25 lakh in metropolitan centres with population above ten lakh
and `15 lakh in other centres for purchase/construction of a dwelling
unit per family excluding loans sanctioned to bank’s own employees.
Rate of interest for loans under priority sector: The rate of interest
on various priority sector loans will be as per RBI’s directives issued
from time to time, which is linked to Base Rate of banks at present.
Priority sector guidelines do not lay down any preferential rate of
interest for priority sector loans.
PAN CARD
 As of May 2010, the Income Tax department in India has made it
mandatory for all Indians to have a PAN card (Permanent Account
Number), irrespective of their tax filing status.
The PAN is a 10-digit alphanumeric number that is issued in the form
of a card. It serves as a universal identification factor for tracking high
value transactions and ensures that all financial transactions are in
compliance with tax laws, and thus help prevent tax evasions.
Benefits of PAN Cards
 PAN is unique, permanent and national and acts as an ID proof.
 Is unaffected by address change, even between states.
 PAN is a must for depositing Rs.50, 000 or more in any bank.
 Must for operating demat accounts or for opening a bank
account.
 For cash payment of a minimum of Rs.50, 000 for buying bankers
cheques, bank drafts or pay orders on a single day.
1. RBI extends date of exchanging pre-2005 notes to Jan 1, 2015
Note: The Reserve Bank has further clarified that the public can
continue to freely use these notes for any transaction. RBI has said
that people can unhesitatingly receive these notes in payment, as all
such notes continue to remain legal tender.
2. Reserve Bank of India (RBI) on 13 March 2014 hiked the trade
related remittance limit from 2 lakh rupees to 5 lakh rupees per
transaction with immediate effect. It also increased the number of
transaction handled by exchange houses.
3. KC Chakrabarty, Deputy Governor, Reserve Bank of India, has quit
three months ahead of completion of his term.
4. RBI pegged 2014-15 GDP growth at a central estimate of 5.5
percent.
5. Economic growth for 2014-15 expected at5.5 pc.
6. CAD expected to come down to 2 pc of GDP in 2014-15.
7. Retail inflation expected to be under 6 pc in 2014.
8. It halved the overnight call money rate to 0.25 percent and
increased the 7-day and 14-day repo limits to 0.75 percent from 0.50
percent.
9. The Reserve Bank of India has constituted a GIRO Advisory Group
(GAG) to implement a national Indian Bill Payment System so that
households will be able to use bank accounts to pay school fees,
utilities, medical bills and make remittances electronically. Panel is
headed by Prof. Umesh Bellur
10. RBI permitted Wholly Owned Subsidiaries (WOS) of the foreign
banks to acquire domestic private sector banks and also permitted
the banks to set up branches anywhere in the country.
Note: foreign banks will not be allowed to hold more than 74
percent in the private banks they may acquire.’
i. Currently, foreign banks as a group are entitled to open 12
branches in India every year.
ii. The initial minimum capital for a WoS will be Rs 500 crore,
iii. RBI said that the WoS will be required to meet Basel-III
requirements (9 per cent Tier-I capital) right from Day One.
iv. For the first three years, the WoS will have to maintain Tier-I
capital at 10 per cent.
BRANCH OPERATIONS
i. They will be allowed to open branches in Tier 1- centers without
taking prior permission from the RBI provided at least 25 per
cent of their branches are opened in un-banked rural centres
(Tier 5 and Tier 6).
BOARD OF DIRECTORS
i. The RBI also mandated that at least a third of the directors
should be independent of the management of the subsidiary in
India, its parent or associates. It also wants at least a third of
the directors to be Indian nationals resident in India.
11. RBI Launches New RTGS System: The Reserve Bank of India on 19
Oct. launched the new Real Time Gross Settlement (RTGS) system for
large-value funds transfer
 Selling or buying immovable property worth Rs.5 lakhs or more.
If the property is co-owned, the PAN of both owners must be
mentioned.
 Sale or purchase of shares, bonds, derivatives, debentures or
other securities over Rs.1 lakh.
 An investment exceeding Rs.50, 000 in shares, mutual funds or
post office savings.
 Payment of a minimum of Rs.25, 000 against hotel or restaurant
bills.
 Payment in cash in connection with travel to any foreign country
of an amount exceeding twenty-five thousand rupees at any one
time.
NEWS RELATED TO RBI
Note:
1, The Real Time Gross Settlement (RTGS) system is a large-value
funds transfer system which banks use to settle inter-bank transfers
for their own accounts as well as for their customers.
2. The new ISO 20022 compliant RTGS system provides three access
options to participants — thick-client, Web-API (through INFINET or
any other approved network) and Payment Originator module.
12. RBI pegs CAD USD 56 billion in 2013-14 much lower than the
quantum projected earlier. The current account deficit (CAD), which
is the difference between outflow and inflow of foreign exchange,
touched an all-time high of USD 88.2 billion or 4.8 percent of the
GDP in 2012-13.
13. According to The Raghuram Rajan committee report suggested a
new methodology for devolving funds on states based on a 'Multi
Dimensional Index (MDI)'.
Note:
i. Based on the MDI scores, the 10 least developed states are:
Odisha, Bihar, Madhya Pradesh, Chhattisgarh, Jharkhand, Arunachal
Pradesh, Assam, Meghalaya, Uttar Pradesh and Rajasthan.
ii. The 7 most developed status are Goa, Kerala, Tamil Nadu, Punjab,
Maharashtra, Uttrakhand and Haryana.
iii. 11 less developed states are : Manipur, West Bengal, Nagaland,
Andhra Pradesh, Jammu and Kashmir, Mizoram, Gujarat, Tripura,
Karnataka, Sikkim and Himachal Pradesh
14. RBI set up a 3 member committee under former Governor Bimal
Jalan to scrutinise applications for new bank licences. The committee
comprises of: Usha Thorat (former RBI Deputy Governor), C B Bhave
(former Sebi chairman) and Nachiket Mor (financial sector expert).
15. RBI has relaxed trade credit norms for all type of companies to
avail of trade credit not exceeding $20 million up to a maximum
period of 5 years for import of capital goods.
16. According to RBI prudential norms:
i. Banks are allowed to lend a maximum of 50% of their capital fund
on any day during a fortnight.
ii. Borrowings by Scheduled Commercial Banks should not exceed
100 per cent of their capital fund.
iii. Banks are allowed to borrow a maximum of 125 per cent of their
capital fund on any day, during a fortnight.
iv. Banks are allowed to lend a maximum of 25% of their capital fund
on a fortnightly basis.
v. Lending of Scheduled Commercial Banks, on a fortnightly average
basis, should not exceed 25 per cent of their capital fund.
17. RBI has decided to introduce a Forex Swap Window to meet the
entire daily dollar requirements of of three public sector oil
marketing companies IOC, HPCL and BPCL
18. According to the new guide line of RBI, now banks can open their
branches in tier I cities (the city which have population more than
one lakh) without taking its permission in each case.
19. RBI Rajbhasa Awards: Punjab National Bank (PNB) won five
Rajbhasa Awards organized by RBI.
20. RBI guide lines for the clearance of all the cheques is 2 days.
21. RBI hiked the investment limit in government securities by FIIs
and long-term investors $25 billion from $20 billion and in corporate
bonds $50 billion from $45 billion.
22. RBI permitted the premature encashment of 8% savings
(Taxable) Bonds for individual investors who are 60 years and above
in age.
23. The RBI said, min paid-up equity of 25 % should be held directly
by the lender. Also, repayment of the principal will commence only
1. The Bank of Bahrain and Kuwait, BBK, plans to expand its operations
in India by opening its fourth branch in the country in New Delhi.
2. The Finance Minister has allowed retirement fund body Employees'
Provident Fund Organisation (EPFO) to become a member of a stock
exchange although its trustees oppose parking even a part of its over
Rs five lakh crore corpus in equities.
3. Canara Bank names cricketer Shikhar Dhawan as its brand
ambassador.
4. Corporation Bank has bagged the awards for lending to MSE (micro
and small enterprises) and to micro enterprises from the Union
Ministry of Micro, Small and Medium Enterprises (MSME) for 2012-
13.
5. Indian Bank has bagged national award for excellence in lending to
micro enterprises for 2012-2013, for the consecutive second year.
6. Interest rate on Post Office FDs increased: The rates apply to post
office saving schemes and the return on 1-2 years deposits has been
hiked by 20 basis points from 8.2 percent to 8.4 percent.
7. The latest data released by the Central Statistics Office shows that
Bihar is the fastest growing State with its Gross State Domestic
Product growing at 15.05 per cent during 2012-13. According to the
CSO data, Gujarat ranked 6th with growth rate at 7.96 per cent,
behind Bihar and Madhya Pradesh with 9.89 per cent, Goa 8.47 per
cent, Kerala 8.24 per cent and Odisha 8.09 per cent. The all-India
growth rate in 2012-13 was 4.47 per cent.
8. India has once again emerged as the largest non oil trading partner
of Dubai in 2013-14.
9. India has committed 8.5 billion rupees to Bhutan for Small
Development Project for the country’s the 11th Five Year Plan.
10. The World Bank provide up to $3 billion in aid for Ukraine in 2014
to help the country deliver much-needed economic reforms.
11. India and United States Energy dialogue was held in New Delhi
from 5 March 2014 to 11 March 2014.
12. Russia suspended from G-8. France’s foreign minister says that
leaders of the Group of Eight world powers have suspended Russia’s
participation in the club amid tensions over Ukraine and Russia’s
incursion into Crimea.
13. Gujarat has been ranked number one in a list of India's 20 largest
states in terms of “economic freedom”.The index on “economic
freedom” takes into account governance, growth, citizens’ rights, and
labour and business regulations.
14. Kotak Mahindra Bank launched its online social account integrated
with Facebook and Twitter.
15. Walmart Stores Inc has filed a lawsuit against Visa Inc, accusing the
credit & debit card giant of conspiring with banks to fix fees that
merchants pay for accepting payments through Visa cards.
16. SEBI gets back power to act against ponzi schemes. The capital
market regulator, the Securities and Exchange Board of India (SEBI),
has got back the power to act against ponzi schemes, illegal deposit
schemes and assess call data records in securitiesrelated offences,
besides others.
17. ICICI Prudential Mutual Fund has bagged Morningstar India’s best
fund house award in the debt, equity and multi-asset category.
18. ADB (Asian Development Bank) pegs GDP growth rate for 2014-15
at 5.5 pc.
19. Bank of India launched Instant Money Transfer Scheme. IMT
scheme allows customers to withdraw cash without using either debt
card or credit card at BoI's IMT-enabled ATMs. This is the firstof-its-
kind initiative launched by a public sector bank.
110
after completion of minimum average maturity of 7 years and no
prepayment will be allowed before maturity.
24. The Reserve Bank opened a special borrowing window of Rs
25,000 crore to help the crisis-ridden mutual funds tide over liquidity
problems.
25. Aditya Birla Group chairman Kumar Mangalam Birla has resigned
from RBI board to avoid any conflict of interest as one of his group
firm is in the race for a new banking licence.
NEWS RELATED TO BANKING & FINANCE
20. A new data on international arms transfers released that India’s
import of weapon systems is three times more than Pakistan and
China.
21. Wholesale Inflation falls to 9-month low of 4.68 per cent in Feb
22. Max Life Insurance ties up with Toyota Financial Services: Max Life
Insurance has tied up with Toyota Financial Services India Ltd to
provide insurance cover to car loan customers.
23. Exim (Export and Import) Bank extends $90 mn line of credit to
Republic of Congo.
24. The headline inflation number, the wholesale price index or WPI,
has increased to 7 per cent in October from 6.46 per cent in
September.
25. Deutsche Bank has become the first bank in India to use the
Reserve Bank of India (RBI)’s window to swap fresh foreign currency
non-resident (bank), or FCNR (B), dollar funds. It has raised about $450
million FCNR (B) deposits from about 10 nonresident Indians and
swapped it with the central bank,
26. YES Bank has become the first bank to raise $ 225 million funds
overseas using the swap loan facility provided by the Reserve Bank of
India (RBI) . The private sector lender raised $255 million ($180 million
and €58 million) by way of dual currency, multi-tenor syndicated loan
facility.
27. Canara Bank and Apollo Munich Health Insurance (AMHI) have
entered into a bancassurance tie-up. This is the first such tie-up for
the insurance company in its six years of existence. Bancassurance is
distribution of insurance products through a bank’s network.
28. In September 4, RBI had announced a swap window to attract
FCNR (B) dollar funds. Accordingly, it has been decided to offer such a
window to banks to swap fresh FCNR (B) dollar funds, mobilized for a
tenure of at least three years, at a fixed rate of 3.5% a year for the
tenure of the deposit,”.
29. World Bank lowers 2013 growth forecast for East Asian developing
countries to 7.1%
30. WTO lowers growth projection for world trade in 2013 to 2.5%
against 3.3 per cent projected in April and 4.3 per cent earlier in the
year
31. Own Your NPA’ campaign launched by IDBI: In a bid to speedily
recover Non-Performing Assets (NPA), the IDBI Bank has launched a
campaign named ‘Own Your NPA’.
32. Tata Communications Payment Solutions Ltd (TCPSL), a wholly
owned subsidiary of Tata Communications Ltd, today inaugurated
Indicash ATMs in Mysore.
Note: The Company’s first white-label ATM was launched at
Chandrapada village in Thane district on June 27, 2013.
33. China launched its first direct bank, a new mode of providing
online banking services without any entity outlets. The direct bank has
been launched by the Bank of Beijing in co-operation with the
Netherlands-based ING Group.
Note: i. A direct bank is a bank without any branch network that offers
its services remotely via online banking and telephone banking and
may also provide access via ATMs (often through interbank network
alliances), mail and mobile.
34. Bhartiya Mahila Bank proposes to complete the first six branches
at Mumbai, Delhi, Kolkata, Chennai, Indore & Guwahati.
35. Headquarter at New Delhi and likely to operational by November
this year.
36. Indian banks would need Rs 3,90,000-5,00,000 crore capital over 38. ICICI Bank, the country’s largest private sector bank, launched its
the next six years in the wake of Basel III capital regulations ‘Branch on Wheels’ to offer basic banking services in remote areas
announced by the RBI. which have so far been devoid of banking facilities.
37. The Bank International Indonesia (BII) launched its operations in
India by opening a branch in Mumbai.

FDI LIMITS
List of Limits in Various Sectors (In %)
1. Defence 49%
2. Pension 49%
3. Insurance 49%
4. Print Media 26%
5. Civil Aviation 49%
6. Public Sec. Banks 49%
7. Private Sec. Banks 74%
8. Multi Brand 51%
9. Single Brand 100%
10. Tourism 100%
11. Pharmaceuticals 100%
12. FM Radio 26%
13. Telecommunication 100%
14. Asset Reconstruction companies 100%

INDIA GDP FORECAST

 RBI lowers India’s GDP growth forecast for 2013-14 to 5%
 CSO (Central Statistical office) lowers India’s GDP growth
forecast for 2013-14 to 4.4%
 Prime Minister's Economic Advisory Council (PMEAC) lowers
India’s GDP growth forecast for 2013-14 to 5.3%
 World Bank lowers India’s GDP growth forecast for 2013-14 to
4.7%
 ADB lowers India’s GDP growth forecast for 2013-14 to 4.7%
 IMF lowers India’s GDP growth forecast for 2013-14 to 3.75%
 Moody’s lowered its forecast to 4.5 per cent, a full one
percentage point below its earlier 5.5 %.
 CRISIL lowers India’s GDP growth forecast for 2013-14 to 4.8%
 HSBC lowers India’s CAD forecast for FY’14 to 3.4%
 Fitch has scaled down its projections on India’s growth to 4.8%
India’s GDP Forecast
[1] RBI pegged 2014-15 GDP growth at a central estimate of 5.5 %
[2] World Bank lowers India’s GDP growth forecast for 2014-15 at 5.5
% from the earlier forecast of 5.7 per cent.
[3] ADB pegs India GDP growth rate for 2014-15 at 5.5 %
[4] FICCI’s Economic Outlook Survey estimated India’s GDP growth
rate at 5.6 percent in 2014-15.
[5] IMF projected GDP growth for India in 2014-15 at - 5.4 %
[6] ADB (Asian Development Bank) ups 2015 India growth rate to
6.3%
[7] Economic and Social Commission for Asia and the Pacific (ESCAP) -
Indian economy to grow at 5.5 percent in current fiscal
[8] Moody (Credit Rating Agency) projected India growth rate
expected to accelerate to 5.2 % in 2014 and 6.5 % by end of 2015.
[9] According to a UN report Indian economy expected to grow by
5.5% in current fiscal.

GLOBAL RATING AGENCY MOODY'S

On 17 April 2015 forecasted that Indian economy will grow at 7.5
percent in 2015. This growth rate is marginally higher compared with
7.2 percent in 2014.
As per the report, India's economy is on a cyclical upswing and
forward-looking indicators suggest domestic demand is gathering
momentum. Also, low inflation has enabled the Reserve Bank of India
(RBI) to cut interest rates by 50 basis points easing pressure on the
private sector. Lower rates as well as the government's infrastructure
and disinvestment programs should provide a boost to domestic-
oriented industries.
On the issue of foreign investment, it said that though foreign
investment in India has been weak because of significant red tape and
taxes but government is taking encouraging steps to reduce these
burdensome regulations to entice more foreign investment.
On the disinvestment front, it said the government has begun selling
public sets as it plans to raise 70000 crore rupees in fiscal 2015-2016.
However, lower government spending is a downside risk to forecast
over the coming year because if revenues fall short, the government is
expected to cut expenditure to meet its 3.9 percent deficit target for
2015-2016.
The growth projections come soon after Moody’s on 9 April 2015 had
revised India’s sovereign ratings outlook to positive
(Baa3) from stable. Another ratings agency, Fitch, had reaffirmed its
stable outlook on India.
Earlier on 14 April 2014,

INTERNATIONAL MONETARY FUND (IMF)

In its World Economic Outlook April 2015 update projected that India 16 by clocking a growth rate of 7.5 percent, helped by its recent policy
will overtake China as the fastest growing emerging economy in 2015- initiatives, pick-up in investments and lower oil prices.
Also,

WORLD BANK
In its South Asia Economic Focus report released on 13 April 2015 could reach 8 percent in 2017-18.
projected that Indian economy will grow at 7.5 percent in 2015-16 and

INDIA’S GDP WILL BE 8% BY 2017 - WORLD BANK

World Bank predicts 8 per cent GDP growth rate for India by 2017, has predicted a GDP growth rate of 8 per cent for India by 2017 and
says strong expansion in the country, coupled with favourable oil said that a strong expansion in the country, coupled with favourable
prices, will accelerate economic growth in South Asia. The World Bank oil prices, would accelerate the economic growth in South Asia. In

111
India, GDP growth is expected to accelerate to 7.5 per cent in fiscal
year 2015-16.
It could reach 8 per cent in fiscal year 2017-18, on the back of
significant acceleration of investment growth to 12 per cent during
fiscal year 2016-2018. The country is attempting to shift from
consumption to investment-led growth, at a time when China is
.
undergoing the opposite transition, it said in its semi-annual report.
The bank's twice-a-year South Asia Economic Focus report projected
steady increase in regional growth from 7 per cent in 2015 to 7.6 per
cent by 2017 on grounds of strong consumption and increasing
investment

INDIA RANKING IN DIFFERENT INDEXES FOR 2013

1. Global Hunger Index 63
2. World Prosperity Index 106. Norway tops the list.
3. Global Gender Gap Report 101. Iceland tops the list.
4. Global Peace Index 141
5. Human Development Report 136
6. Global Corruption Index 94
7. Global Competitiveness Index 60 for 2013 (Switzerland top in this report)
8. Gender Inequality Index 132 (UN Human Development (Index) Report)
9. In List of High Net worth Individuals 5 acc to the Knight Frank Wealth Report 2013)
10. In The List of Spam Spewing Nation in the World 3 (after US and China): as per the new report of Sophos Labs.
11. India has been ranked as the 119th freest country in the world out of 177 in the 2013 index of economic freedom.

INDEX/REPORTS ISSUED BY DIFFERENT ORGANIZATIONS IN WORLD

1. World Economic Outlook is published by: International Monetary Fund (IMF).
2. Global Hunger Index is issued by: International Food Policy Research Institute
3. Global Peace Index is issued by: Institute for Economics and Peace
4. Global Corruption Index is issued by: Transparency International
5. Global Competitiveness Index is issued by: World Economic Forum
6. Human Development Report is issued by: United Nations Development Programme (UNDP)
7. Gender Inequality Index is issued by: United Nations Development Programme (UNDP)

RANKING OF INDIA IN DIFFERENT INDEXES IN WORLD 2014

1. World’s largest Crude Oil Importer Index 2014 -3rd (China Topped)
2. Country with Highest Numbers of Internet Users Index 2014 -3rd (China Topped)
3. Most Favorite Investment destination by UNCTAD 2014 -4th (China Topped)
4. Intellectual Property Environment Index 2014 -25th (USA Topped)
5. Happy Planet Index 2012 -32nd (Costa Rica Topped)
th
6. Country With Highest Suicide Rate -45 (Lithunia Topped)
7. Global rank in Favoritism Index 2014 -49th (Qatar Topped)
8. Global Competitiveness Index 2014 -71st (Switzerland Topped)
9. Global Innovation Index 2014 -76th (Switzerland Topped)
10. World Corruption Index 2013 -94th (Denmark, New Zealand are Corruption Free and Somalia,
North Korea, Afghanistan are most corrupted)
11. World Prosperity Index 2013 -106th (Norway Topped)
12. Globalization Index 2013 -107th (Belgium Topped)
13. Press Freedom Index 2014 -140th (Finland Topped)
14. Human Development Index 2014 -135 (Norway Topped)
15. Ease of doing business Index 2014 -142nd (Singapore Topped)
16. Global Peace Index 2014 -143rd (Iceland Topped)
17. Environment Performance Index 2014 -155th (Switzerland Topped)

SOME IMPORTANT INDEX WITH DEFINITION:

1. What is Human Development Index?
The Human Development Index (HDI) is a composite statistic of life
expectancy, education, and income indices used to rank countries
into four tiers of human development.
2. What is Global Corruption Index?
Transparency International (TI) has published the Corruption
Perceptions Index (CPI) annually ranking countries "by their perceived
levels of corruption, as determined by expert assessments and
opinion surveys."
3. What is Press Freedom Index?
The Press Freedom Index is an annual ranking of countries compiled
and published by Reporters without Borders based upon the
organization's assessment of the countries' press freedom records in
the previous year.
4. What is Environmental Performance Index (EPI)?
The Environmental Performance Index (EPI) is a method of
quantifying and numerically marking the environmental performance
of a state's policies. This index was developed from the Pilot
Environmental Performance Index, first published in 2002, and
designed to supplement the environmental targets set forth in the
United Nations Millennium Development Goals.
5. What is Press Freedom Index?
The Press Freedom Index is an annual ranking of countries compiled
and published by Reporters Without Borders based upon the
organization's assessment of the countries' press freedom records in
the previous year. It reflects the degree of freedom that journalists,
news organizations, and netizens enjoy in each country, and the
efforts made by the authorities to respect and ensure respect for this
freedom.

ECONOMIC NEWS:

112
 India & World In the World Bank Report, India top beneficiary
with foreign remittances worth 71 billion dollars followed by
China with 60 billion dollars and the Philippines which got 26
billion dollars.
 World Bank and the Asian Development Bank, have assured a
financial assistance of USD 313 million to Odisha government for
restoration and rehabilitation activities in cyclone Phailin hit
areas.
 Vancouver Gets World's First Bitcoin ATM: The world’s first
Bitcoin ATM machine which can exchange digital currency -
Bitcoins -for any official currency has launched in Vancouver,
Canada on 29 October 2013. The ATM machine, named
Robocoin, About BitcoinsBitcoin is a virtual currency that is
unregulated by any central bank or government, but still works
for purchasing goods and services from retailers willing to accept
it.
 Max Bupa Health Insurance has entered into a bancassurance
tieup with Deutsche Bank.
 Six major central banks in the world made currency swap
arrangements permanent on 31 October 2013 as a prudent
liquidity backstop in case of future global financial strains.
Names of Six major central banks
1. The Bank of Japan
2. U.S. Federal Reserve
3. European Central Bank
4. Bank of England
5. Central bank of Canada
6. Central bank of Switzerland
About Central bank liquidity swap:
1. Central bank liquidity swap/Currency is a type of currency swap
used by a country's central bank to provide liquidity of its currency to
another country's central bank.
2. Central Bank of India opens liaison office in Hong Kong. Rajeev
Rishi is CMD of CBI.
3. Canara Bank, Pune Circle has launched a CASA Carnival in all its
branches in Pune and in 14 districts of Maharashtra, to mobilise
Savings and Current Accounts through door-to-door and shop-toshop
campaign
4. Canara Bank has agreed take over the Amanath Cooperative Bank.
5. Canara Bank signed a MoU with industry body CII to facilitate
cheaper credit access to micro, small and medium enterprises. Under
the MoU, Canara Bank shall extend a concessional credit of 50 basis
points on the applicable card rate of interest to MSME units which
are members of CII.
6. India Ratings & Research (Ind-Ra) expects India's GDP growth to
remain sluggish at 4.9 per cent in the current financial year, due to a
mix of domestic and external factors.
7. Market regulator Sebi has disqualified Cals Refineries from issuing
equity shares and any other security for a further eight years, as the
company was found guilty in a case involving irregularities in issuance
of Global Depository Receipts (GDRs).
8. In a new initiative, Axis Bank entered into a tie up with the UIDAI
that will enable the bank to open accounts by using the 12-digit
Aadhaar number of the customer.
9. India Signed Pact with World Bank for Uttar Pradesh Water Sector
Restructuring Project for credit of 360 million US Dollar.
10. World Bank approves $250-m aid for Uttarakhand which was hit
hard by rains and landslides in June that killed 580 people, to help the
State undertake rehabilitation work and strengthen its capacity for
disaster management.
11. Corporation Bank tops in loans to small units: The Ministry of
Micro, Small and Medium Enterprises has assigned Corporation Bank
No. 1 rank under the ‘National Awards for Excellence in MSE (micro
and small enterprises) Lending’ for 2012-13.
12. Himachal Pradesh on 26 October 2013 became the second state
after Haryana to introduce Union National Vocational Qualitative
Framework (NVQF) Scheme. The scheme has been implemented by
the All India Technical Education Council and the National Skill
Development Council.
13. Switzerland became the world’s 58th nation to sign the
Multilateral Convention on Mutual Administrative Assistance in Tax
Matters.
14. World Bank funds project to help 300,000 families in North East
Rural Livelihood Project (NERLP) would be executed in four
northeastern states - Mizoram, Nagaland, Sikkim and Tripura, to uplift
the economic condition of the rural people.
15. Leaders of BRICS announced to set up 100 Billion US Dollars Fund
to steady currency markets (to guard against financial stocks)
destabilized by an expected pullback of US monetary stimulus.
16. Note: Brazil, India and Russia committed 18 billion dollars each
while China announced 41 billion US dollars. South Africa announced
5 billion US dollars.
17. Romania gets 2 bn euro IMF standby aid. The IMF loan is a
twoyear standby arrangement for 1.98 billion euros, to give the
government space to continue reforms.
Note: Romania President: Traian Băsescu. Capital: Bucharest.
Currency: Leu
18. Nabard (National Bank for Agriculture and Rural Development)
has sanctioned Rs 40 cr for rural water supply scheme in the Union
Territory of Puducherry under Nabard’s Rural Infrastructure
Development Fund (RIDF).
19. Nabard opens lending window for pvt sector: The National Bank
for Agriculture and Rural Development (Nabard) has opened a
lending window for private sector for the creation of warehouse
space and also to set up cold storages and cold chains in Karnataka.
20. SEBI board approves new Foreign Portfolio Investor norms: The
new class of investors, FPIs, would encompass all FIIs (Foreign
Institutional Investors), their sub-accounts and Qualified Foreign
Investors (QFIs), and would be divided in three categories as per their
risk profile.
Under the new FPI regime:
i. All existing FIIs, Sub Accounts and QFIs will be eventually merged
into this new investor class to be known as FPIs.
ii. The Category I FPIs, which would be the lowest risk entities, would
include foreign governments and government related foreign
investors,
iii. “Category II’ FPIs would include “appropriately regulated broad
based funds, appropriately regulated entities, broad-based funds
whose investment manager is appropriately regulated, university
funds, university related endowments, pension funds etc“.
iv. The Category III FPIs would include all others not eligible under the
first two categories.
v. SEBI said that all existing FIIs and Sub Accounts may continue to
buy, sell or otherwise deal in securities under the FPI regime.
21. GAAR to come into effect from April 1, 2016: The controversial
GAAR provision, which seeks to check tax avoidance by investors
routing their funds through tax havens, will come into effect from
April 1, 2016.
Note: The provision of General Anti Avoidance Rules (GAAR) will
apply to entities availing tax benefit of at least Rs 3 crore, according
to the notification. It will apply to foreign institutional investors (FIIs)
that have claimed benefits under any Double Tax Avoidance
Agreement (DTAA).
22. ADB (Asian Development Bank) to lend $500m for Rajasthan clean
energy projects:
23. Japan to promote 'womenomics', pledges over $3 billion ODA:
Japan will promote "womenomics" -- a theory which asserts that the
advancement of women in society is directly correlated with its
growth rate.
24. China holds the world’s largest Foreign Exchange Reserve with
$3.31 trillion tops the list.
25. Internet giants Yahoo closed its news and community services in
China.
26. Air India & SBI Cards launch co-branded credit card: that seeks to
add value to the travel experience of Indian customers. SBI Cards is a
joint venture between SBI and GE Capital.Rohit Nandan, Chairman
and Managing Director, Air India.
27. Import duty on Gold hike to 10% and in Gold jewellery hiked to
15%.
28. SBI Life launches Smart Power Insurance plan which is designed to
care for investor’s twin needs of insurance and investment. SBI Life
Insurance is a joint venture between State Bank of India and BNP
Paribas Cardif, the insurance arm of BNP Paribas.
29. ICICI Prudential Life launches new unit-linked pension plan: ICICI
Pru Easy Retirement
30. ICICI Bank launches new Facebook app Pockets that will enable
customers of the bank to transfer money, recharge mobile phones
and book movie tickets from their Facebook pages.
31. ICICI Bank opened skill training academy in Jaipur (Rajasthan) to
provide vocational training to youth from economically weaker
section of the society.
32. IndiaFirst Life offers policies in demat form: Private life insurer
IndiaFirst Life has announced the availability of all its policies in
dematerialized format (insurance policies in electronic form).
33. ADB (Asian Development Bank) funds Rs 130 cr to flow into
Agartala water pipelines would overhaul the entire 53-year-old water
supply system.
34. Government of India has shifted the administrative control of
Forward Markets Commission (FMC), the chief regulator of Forwards
and Futures Commodity Markets in India to the Ministry of Finance.
Earlier it was under the control of the Department of Consumer
Affairs under the Ministry of Food.
35. The foundation stone of Mainline Electrical Multiple Unit (MEMU)
Coach Factory was laid at Rupaheli Station, Bhilwara District,
36. The Cabinet Committee on Economic Affairs (CCEA) approved
continuation of the scheme for Integrated Textile Parks in the 12th
five year plan.
37. Muthoot Fincorp, which is actually a part of Muthoot Pappachan
Group, announced launching 100 crore Rupees non-convertible
debenture (NCB) issue in order to fund the expansion of microfinance
as well as small and medium enterprise (SME) business.
38. Retirement fund body EPFO is likely to announce an interest rate
of 8.5 % from 8% on provident fund deposits for 2013-14.
39. The Central Government raised customs duty on gold, silver and
platinum to 10 percent in a bid to curb the surging imports and
burgeoning Current Account Deficit (previously gold 8% and silver
6%).
40. India has signed a loan agreement of 100 million US dollar with
the World Bank for its Low Income Housing Finance Project. The
objective of the project is to provide access to sustainable housing
1. Assam became the first state to observe Child Protection Day
2. Google Inc has partnered with Luxottica SpA, the makers of RayBan
and Oakley sunglasses for for Google Glass.
3. Workdays for tribals under MNREGA raised from 100 to 150
4. Arjun Kapoor Named National Ambassador for Earth Hour 2014
5. The Directorate of revenue Intelligence has seized a record over
2.4 lakh kg of ozone-depleting restricted refrigeration gas ‘R-22’,
which was being smuggled into the country.
6. India and the 11-country South-East Asia region received formal
certificates to mark a health milestone – being polio-free by WHO.
7. Vandana Foundation launched AQUATM in Mumbai. The AQUATM
is a water vending machine from which water can be purchased. This
water wending machine will release 1 liter water at a price of 1
rupee.
8. India and Singapore won the 2014 edition of the UN-Water “Water
for Life” Best Practices Award for their sustainable practices of water
resources.
9. Indian Writer Pankaj Mishra won Windham Campbell Literature
Prize 2014 in non-fiction category.
1. India's public broadcaster Prasar Bharati and Radio-Television of
Slovenia (RTV-SLO) on 13 November 2013 signed an MoU to develop
and strengthen mutual friendly relations through an increased
cooperation in the field of broadcasting.
114
finance for low income households to purchase, build or upgrade
their dwellings.
41. India tops BRICS in super-rich membership: World Ultra Wealth
report 2013.
42. India, Japan to enhance currency swap arrangement to USD 50
billion a development that is likely to bring stability in financial
markets in the country.
43. NABARD has sanctioned Rs 113.70 crore to Karnataka under Rural
Infrastructure Development Fund (RIDF).
44. Maharatna status for BHEL and GAIL.
45. The government signed a $60 million loan agreement with the
World Bank to improve watershed operations in seven districts of
Karnataka.
46. Centre to set up country's 1st geothermal power project in
Ladakh.
47. LIC Housing Finance has launched a new home loan product called
“Bhagyalakshmi” for women home seekers.
48. ADB gave 100 Million US Dollar Loan to Uttarakhand for the urban
infrastructure programme.
49. The ADB has offered $150 million loan for the expansion of
railway tracks and to improve overall service in the country.
50. ADB announced to provide $74.8 million loan to improve road
connectivity in the North East states.
51. ADB to provide $300 million loan to Chhattisgarh for overhauling
roads.
52. India is 4 largest energy consumers in the world: According to a
Report by US Energy Information Administration (EIA), India has
emerged the fourth largest energy consumer of the world after the
US, China and Russia, but its per capita energy consumption remains
lower than that of developed countries.
53. SIDBI signs tripartite MoU with Egyptian body, World Bank: Small
Industries Development Bank of India (SIDBI) has signed a tripartite
Memorandum of Understanding (MOU) with Social Fund for
Development (SFD) Egypt and the World Bank.
54. Minimum net-owned funds for money transfer business: Rs 50
lakh. 55. Asian Development Bank (ADB) will provide about 6 billion
dollars loan to India to maintain its lending level to India.
56. The Union Cabinet approved Women Self Help Groups to Get Low
Interest Loans at 7% with the objective of removing poverty in rural
areas.
POINT TO REMEMBER
10. Bill Gates regains world's richest man title: Forbes. Microsoft
cofounder Bill Gates has regained the title of the world's richest man
in the Forbes magazine's annual billionaire list that includes 56 India
based billionaires led by RIL Chairman Mukesh Ambani.
11. India nominated Rani-ki-Vav located in Patan, Gujarat and the
Great Himalayan National Park (GHNP) in Himachal Pradesh for
UNESCO’s World Heritage Site Status for 2014.
12. India and Japan signed a currency swap agreement for up to 50
billion dollars to address short-term liquidity problems. The bilateral
swap arrangement (BSA) has been inked between the Reserve Bank
of India and the Bank of Japan.
13. India signs $70 million loan pact with World Bank for Karkataka
Health Systems Development, Reform Project. 14. India and World
Bank Signed 500 Million Dollar Deal for “Shiksha Abhyan”.
15. India and Japan signed an Earths Pact that will enable the latter to
import the rare Earth minerals from India.
16. India and ASEAN signed the free trade agreement (FTA) in services
and investments to boost trade to $100 billion by 2015.
MOU SIGNED BY INDIA
2. India and Japan decided to strengthen their Cooperation in the
Maritime Sector.
3. Japan grants $130 m for Tamil Nadu infra projects
4. Japan pledges $150 mn for Uttarakhand flood relief
5. India Signed Financing and Project Agreements with World Bank
for Disaster Management assistance of 236 million US Dollar. The
agreements were signed for Tamil Nadu-Puducherry Coastal Disaster
Risk Reduction Project (CDRRP).
6. MTNL (Mahanagar Telephone Nigam Limited) signed a MoU with
Los Alamos Technical Associates, Inc. (LATA) of USA to impart Security
Training in India.
7. India and South Korea on Saturday discussed ways to add strategic
and economic content to bilateral ties in the key areas including
security, trade and investments.
8. In a first-of-its-kind initiative to promote use of clean technology,
India signed an agreement with Finland to produce indigenous
ethanol and reduce country’s dependence on its import. As per the
deal, State-run explorer ONGC and Finnish clean technology firm
Chempolis will set up a pilot project to produce ethanol, biochemicals
and bio-coal from biomass residual matters.
9. Private sector lender Yes Bank and credit rating company Care
Ratings have entered into an agreement to offer services and
products in the small and medium enterprise (SME) segment.
10. GAIL signed a Gas Cooperation Agreement (GCA) with the
Department of Industries, Government of Bihar for development of
natural gas infrastructure and city gas network in Bihar.
11. GAIL India and Paradip Port Trust on 26 October 2013 signed a
Memorandum of Understanding for setting up an offshore Liquefied
Natural Gas (LNG) terminal at Paradip Port, Odisha.
12. Australian Trade Commission (Austrade) and YES Bank ink pact for
knowledge sharing in food and agricultural sectors.
13. India and Peru Signed MoUs to Strengthen Bilateral Cooperation.
The Vice President of India visited Peru to celebrate the 50th year of
establishment of diplomatic ties between the two countries. Note:
Capital of Peru – Lima, Currency: Peruvian nuevo sol, President:
Ollanta Humala Tasso
14. India has given Bhutan one 100 crore rupees as assistance for the
new government ’s stimulus plan. India’s Ambassador to Bhutan V. P
Haran PM of Bhutan: Prime Minister Tshering Tobgay.
15. India and Cuba on 30 October 2013 signed a Memorandum of
Understanding (MoU) for cooperation in broadcasting between
Prasar Bharati and Cuban Radio and Television Institute (ICRT).
16. Indian Institute of Mass Communication (IIMC), New Delhi and
Queensland University of Technology (QUT), Brisbane, Australia
signed the International Cooperation Agreement to collaborate in
academic programmes and in frontier areas of research in Media and
Communication on 4 November 2013.
17. The US and India have launched the third India-US-Africa
triangular agricultural training programme at the National Institute of
Agricultural Extension Management (MANAGE).
18. Housing and Urban Development Corporation Limited (HUDCO)
on 29 October 2013 signed a Memorandum of Understanding (MoU)
with School of Planning and Architecture (SPA), New Delhi.
19. India, US seal first commercial deal on civil nuclear power: The US
Nuclear Regulatory Commission (NRC) and the Indian Atomic Energy
Regulatory Board (AERB) intend to sign a memorandum of
understanding for the exchange of technical information in nuclear
safety matters
20. India & Bangladesh deal two energy cooperation : India begins
electricity export to Bangladesh with the inauguration of the
Bangladesh-India Power Transmission Centre at western
Bherampura, adjacent to West Bengal.
Note: India will export 500 megawatts of electricity a day to
Bangladesh over a period of 35 years. The 'Maitri' thermal power
project is being developed by the Bangladesh-India Friendship Power
Company, a joint venture between NTPC and Bangladesh Power
Development Board
21. India seeks Belgium's and Turkey support to enter arms control
regimes: Belgium will support India's efforts to become a full member
of the four arms control regimes, namely, NSG, Missile Technology
Control Regime (MTCR), Wassenaar Arrangement and Australia
Group.
Note:
115
i. Belgian King: King Phillppe, Prime Minister: Elio Di Rupa. Currency –
Euro. Capital: Brussels
ii. NSG has 47 members, MTCR has 34 countries as its members,
Wassenaar Arrangement has 41 members
iii. Wassenaar Arrangement is an order which is for the promotion of
regional security, international security and stability by offering
transparency and greater responsibility in transfers of conventional
arms, dual-use goods and technologies.
iv. Turkey: President : Abdullah Gül PM: Recep Tayyip Erdoğan.
Capital: Ankara. Currency Lira:
v. Both the countries are member of all groups.
22. Archaeological Survey of India (ASI) signed an agreement with
Google to create 360 degree online imagery of 100 of India’s most
important heritage sites. The sites include the Taj Mahal, Khajuraho ,
Ajanta and Ellora caves.
23. India has extended Lines of Credit (LoC) worth $640 million to
Mozambique:
Note:
i. India is the 8th largest foreign investor in Mozambique with total
investments estimated at more than $500 million.
ii. Armando Emílio Guebuza: President of Mozambique.
iii. Alberto Vaquina: Prime Minister of Mozambique.
iv. Capital of Mozambique - Maputo
v. Currency of Mozambique:Metical
24. Bharti Enterprises and Wal-Mart Stores, Inc. together for
operations in the Indian retail sector. Walmart would acquire Bharti's
stake in Bharti Walmart Pvt Ltd, a joint venture between Bharti and
Walmart, giving Walmart 100 per cent ownership of the Best Price
Modern Wholesale cash and carry business.
25. The Indian Railways on 3 October 2013 signed a pact with
Rashtriya Ispat Nigam Limited (RINL) to set up the country's biggest
Forged Wheel plant at Lalganj, Raebarelli in Uttar Pradesh.
26. The Cabinet Committee on Economic Affairs (CCEA) cleared Jet
Airways proposed sale of 24 per cent equity to Abu Dhabi-based
Etihad Airways, paving the way for the biggest ever foreign
investment in the Indian aviation sector.
27. Tata Power to set up coal-fired plant in Myanmar. This would be
the first project by the Tata Group Company in the South-East Asian
nation. the power plant is proposed to be located in Ngayok Kaung,
Ayeyarwaddy region.
28. Tata Power, country's largest private power generator has signed
an agreement with EESL for energy efficiency and conservation
initiatives. EESL (Energy Efficiency Services Ltd) is a joint venture of
public sector units of the Ministry of Power.
29. Tata inks deal with Singapore Airlines to start a new carrier
30. SEBI inked MoU with Argentina to promote mutual assistance and
exchange information related to securities markets in both the
countries.
31. India announced an aid of 5000 crore rupees to Bhutan.
32. India and Latvia signed an agreement on Double Tax Avoidance
Agreement and the Prevention of Fiscal Evasion with respect to Taxes
on Income Latvia is the third Baltic country with which DTAA has been
signed by India. Earlier DTAAs were signed with Lithuania and Estonia.
33. The Asian Development Bank (ADB) and the Centre signed an
agreement for US $300 million additional loan to upgrade 254
kilometres of deteriorated highways in northern and southern Bihar.
34. India extends US$144mn credit line to Liberia of power
transmission and distribution projects to reduce the gap of power
shortage in Liberia.
35. India and Myanmar set 3 billion dollar trade target by 2015 during
the meeting of India’s energy minister Anand Sharma with his
Myanmar counterpart U Than Htay in New Delhi held on 6 June 2013.
36. India and Japan signed a currency swap agreement for up to 50
billion dollars to address short-term liquidity problems. The bilateral
swap arrangement (BSA) has been inked between the Reserve Bank
of India and the Bank of Japan.
37. India signs $70 million loan pact with World Bank for Karkataka
Health Systems Development, Reform Project.
38. India and World Bank Signed 500 Million Dollar Deal for “Shiksha
Abhyan”.
39. India and Japan signed an Earths Pact that will enable the latter to
import the rare Earth minerals from India.
1. The food security bill approved is directed towards giving the right
to food to around 67 per cent of India's 120-crore population.
2. 75 percent of rural and 50 percent of the urban population are
entitled for three years from enactment to 5 kg food grains per
month
3. While families in the poorest of the poor will continue to get 35 kg
of grains per month.
4. Rice will be made available at 3 Rs per Kg.
5. Wheat will cost 2 rupees a kg and cereal will be sold for 1 Rupees
per kg.
6. About 2.43 crore poorest of the poor families covered under the
Antyodaya Anna Yojana (AAY) scheme under PDS (Public Distribution
LATEST GOVERNMENT SCHEMES - CENTRAL AND STATE GOVT.
1. Pradhanmantri Jan-Dhan Yojana : To provide bank accounts,
insurance cover and a debit card to all Indian citizens. Here are some
benefits of this Government Scheme launched by PM Narender Modi.
It was launched on 15 August 2014.
Features and Highlights of Jan Dhan Yojna 2014 -
a. Jan Dhan Yojna account holders will be provided free zero-balance
bank account along with RuPay debit card. They will also be entitled
to accidental insurance cover of Rs 1 lakh.
b. Those people who open their account by January 26, 2015, they
will also be given life insurance cover of Rs 30,000.
c. After opening of account for 6 months, account holder can avail Rs
5,000 loan from the bank.
2. Krishi Amdani Beema Yojana : It is to help farmers don’t bear any
financial loss if their crops gets destroyed due to any reason like
unexpected weather.
3. PradhanMantri Gram Sinchai Yojana :
It was launched to boost agricultual yield.
4. Pradhan Mantri Saansad Adarsh Gram Yojana - Launched by PM
Modi, this scheme is an an ambitious village development project
under which each MP will take the responsibility of developing
physical and institutional infrastructure in 3 villages by 2019.
5. Project Uddan : The project was started to providing skills to
40,000 young people over a period of five years.
6. Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) : It is a pension
and life insurance scheme started by Indian government.
7. Rani Laxmi Bai Pension Scheme : It is a 'Special pension' scheme for
Muzaffarnagar riot victims announced by UP Govt.
8. Roshini Scheme : This yojana was launched for skill development
and job placement for rural youth and women in maoist affected 24
districts in 9 states.
1. Book: Akbar, The Aesthete is authored by Dr. Indu Anand,
2. Rationalised Roman for Kashmiri written by Dr R L Bhat.
3. The Luminaries by: Eleanor Catton, Became the Longest Novel to
Win the Man Booker Prize 2013.
4. Walking With Giants: authored by former Finance Secretary G.
Ramachandran.
5. "I am Malala : authored by Mala Yousafzai.
6. Momentous Times on the 175 years of Times of India. The book is
an effort of the Times of India Group.
7. "Victory India - A Key to Quality Military Leadership" authored by
Colonel Vinay B Dalvi (Retd)
8. The Da Vinci Code: Dan Brown
9. The Wizard of Hockey: Graphic Biography on Dhyan Chand book
written by Luis Fernandes
10. Pride and Prejudice: Jane Austen
11. Angels & Demons: Dan Brown
12. The Kite Runner: Khaled Hosseini.
116
40. India and ASEAN signed the free trade agreement (FTA) in services
and investments to boost trade to $100 billion by 2015.
MAIN POINTS OF FOOD SECURITY BILL 2013
System) would continue to get 35 kg of food grains per family per
month but with legal entitlement.
7. In Union Budget 2013-14, Rs 10,000 crore set aside for incremental
cost for National Food Security Bill.
8. The scheme will be linked to the Aadhar scheme which provides
every citizen with a unique identification number that's linked to a
database that includes the biometrics of all card-holders.
9. C Rangarajan is the head of the committee for examination of the
Food Security Bill.
10. Chhattisgarh the first state to pass legislation on food security.
9. Free CFL bulb Scheme : It is a State Govt. scheme launched by
Tamil Nadu. Free CFL bulb scheme will provide free compact
fluorescent light (CFL) bulbs to over 14 lakh hut
dwellers in the state.
10. Vikram Unyogpuri : It is a Delhi-Mumbai industrial Corridor
project. It was launched in Madhya Pradesh.
11. Swavlamban Abhiyan : It was launched by PM Modi and have 11
welfare schemes of Gujarat government.
12. Anna Bhagya Scheme : It is a Karnataka Government Scheme
launched in Karnataka. It includes distribution of 30 kg rice at one
rupee per Kg to over 98 lakh BPL and Antyodaya card holders in the
state.
12. Rajiv Gandhi Jeevandayee ArogyaYojana : A Health Insurance
scheme launched in
Maharashtra.
13. Amma Cement Scheme : This Scheme was launched by Tamil
Nadu Government. It will procure cement from private
manufacturers and sell them at Rs. 190 per bag.
14. Golden Girl (Bangaru Talli) Scheme : It was launched in Andhra
Pradesh to protect girl child and ensure their education.
15. Bhagat Puran Singh Sehat Beema Yojana (BPSSBY) : Health care
scheme for BPL
families launched in Punjab.
16. Annapurna : Under this government scheme, 10 kg of food grains
are provided to BPL
households free of cost every month.
17. e-inclusion project : This project was started to spread e-literacy.
RECENT BOOKS AND AUTHORS
13. Life of Pi: Yann Martel.
14. Harry Potter series: J.K. Rowling.
15. The Third Curve: a Book Written by Film Director Mansoor Khan
16. The Score of My life: Zubin Mehta
17. India & Malaysia: Intertwined Strands by: Veena Sikri
18. Mythily Sivaraman Wrote A Book Haunted by Fire Essays On
Caste, Class, Exploitation And Emancipation
19. “Ahmev Radha, Ahmev Krishnah” - Gulab Kothari (Chief Editor of
Hindi newspaper Rajasthan Patrika)
20. An Uncertain Glory: India and its Contradictions - Jean Dreze and
Amartya Sen.
21. A Brush with Life- Satish Gujral
22. A Bend in the river- V.S. Naipaul
23. God of Small things- Arundhati Rai
24. Inheritance of Loss- Kiran Desai.
25. Joseph Anton- Sulman Rushdie (Autobiography)
26. “Khushwantnama-The Lessons of My Life “ –Khushwant singh
27. Lajja- Taslima Nasrim. 35. True Colours — Adam Gilchrist
28. My Unforgettable Memories-Mamata Banerjee 36. The Test of My Life'- Indian cricketer Yuvraj singh
29. "Muslim in Indian cities”- Christophe Jaffrelot & Laurent Gayer 37. “Those were the Day and then-The Life & Times of Lal Krishna
30. My country My Life- L.K.Advani Advani”-Mira Govind Advani
31. My Music My Life- Pt Ravi Shankar 38. Turning Points-APJ Abdul Kalam
32. Revolution 2020- Chetan Bhagat 39. What Young India Wants – Chetan Bhagat
33. Runs in Ruins — Sunil Gavaskar 40. My Journey: Transforming Dreams into Actions - former President
34. Satenic versus- Salman Rushdi of India, Dr. Avul Pakir Jainulabdeen Abdul Kalam (APJ)

LIST OF IMPORTANT SUMMITS OF THE WORLD

G20 Summits (1999)
The Group of Twenty Finance Ministers and Central Bank Governors 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. Chairperson Tony Abott, Total Countries 20 Countries= BRICS + G7 + Argentina, Australia, Indonesia, Mexico, South Korea, Saudi Arabia,
Turkey
• 8th G 20 Meeting 2013 – Saint Petersburg, Russia
• 9th G 20 Meeting 2014 – Brisbane, Australia
• 10th G 20 Meeting 2015 – Turkey
• 11th G 20 Meeting 2015 – China

BRICS Summits (2008)

Countries (5) Brazil, Russia, India, China and South Africa
• 5th BRICS Summit 2013 – Durban, South Africa
• 6th BRICS Summit 2014 – Fortaleza, Brazil
• 7th BRICS Summit 2015 – UFA, Russia

G7 Annual Summits (Earlier it was G8, Now Russia suspended Temporarily) (1975)
Group of Seven Countries – France, Germany, Italy, Japan, United Kingdom, United States of America, Canada. SAP Training Institutes #1 SAP
Education Partner in India. 18K Consultants Trained. Apply Now. GKLibrary.com
• 39th G8 Summit 2013 – County Fermanagh, UK
• 40th G8 Summit 2014 – Brussels, Belgium
• 41st G8 Summit 2015 – Schloss Elmau, Germany

SAARC Summits (South Asian Association for Regional Cooperation) (1985)

HQ Nepal , Secretary General Arjun Bahadur Thapa and Indian Representative at SAARC Lakshmi Savithri Countries (8) Afghanistan,
Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka.
Theme of 18th SAARC Summit – ‘Deeper Integration for Peace, Progress and Prosperity’
• 17th SAARC Summit 2011– Addu, Maldives
• 18th SAARC Summit 2014 – Kathmandu, Nepal
• 19th SAARC Summit 2015 – Islamabad, Pakistan

ASEAN Summits (Association of South East Asian Nation)

HQ Jakarta, Indonesia, Total Countries 10 and Secretary General Le Luong Minh (Vietnam)
INDIA IS NOT IN ASEAN COUNTRIES.
• 22nd ASEAN Summit 2013 (April) – Brunei
• 23rd ASEAN Summit 2013 (October)– Brunei
• 24th ASEAN Summit 2014 (May)– Nay Pyi Taw, Myanmar
• 25th ASEAN Summit 2014 (November)– Nay Pyi Taw, Myanmar

ASEAN-India Summit
• 9th ASEANIndia Summit 2011 – Bali, Indonesia
• 10th ASEANIndia Summit 2012 – Phnom penh, Cambodia
• 11th ASEANIndia Summit 2014 – Nay Pyi Taw, Myanmar

East Asia Summit (EAS)

EAS meetings are held after annual ASEAN leaders’ meetings.
• 6th East Asia Summit 2011 – Bali, Indonesia
• 7th East Asia Summit 2012 – Phnom penh, Cambodia
• 8th ASEANIndia Summit 2014 – Nay Pyi Taw, Myanmar

117
 IBSA Summits (2003)
IBSA Dialogue Forum – India, Brazil, South Africa.
• 6th IBSA Summit 2013 – New Delhi, India
• 7th IBSA Summit 2015 – New Delhi, India

BIMSTEC Summits (Bay of Bengal Initiative for Multisectoral Technical and Economic Cooperation (1997)
Total Countries (7) Bangladesh, India, Myanmar, Nepal, Srilanka, Thailand, Bhutan. Chairmanship Nepal
• 3rd BIMSTEC Summit 2014 – Nay Pyi Taw, Myanmar
• 4th BIMSTEC Summit 2015 – Nepal

APEC Summits (Asia Pacific Economic Cooperation) (1989)

Total Countries 21 , HQ Singapore and Executive Director Alan Bolard INDIA IS NOT IN APEC COUNTRIES.
• 25th APEC Summit 2013 – Medan/Jakarta, Indonesia
• 26th APEC Summit 2014 – Beijing, China
• 27th APEC Summit 2015 – Philippines, Manila
• 28th APEC Summit 2016 – Peru, Lima
• 29th APEC Summit 2017 – Vietnam, Hanoi

Nuclear Security Summit (NSS) (2010)

Total Countries participated in the 2nd NSS 2012 summit was 53 countries.
• 3rd NSS 2014 – Hague, Netherlands
• 4th NSS 2016 – USA

NATO Summit (North Atlantic Treaty Organization) (1949)

Total Countries 28 , HQ Belgium and Secretary General Jenus Stoltenberg (newly elected from Norway)
INDIA IS NOT IN NATO SUMMIT COUNTRIES.
• NATO 2014 Britain UK

OTHER SUMMITS:
1. 15th International OPEC Summit, 2014 Paris, France
2. 47th ADB Meeting, 2014 Astana, Kazakhstan
3. United Nations Climatic Change Meeting, 2014 Newyork, USA
4. 9th WTO Ministerial Conference, 2013 Bali, Indonesia (10th WTO Ministerial Conference, 2014 Venue not yet decided)
5. 18th BASIC Ministerial Meeting, 2014 New Delhi, India (Basic Brazil, South Africa, India, China)
6. 6th International Nuclear Energy Forum ATOMEXPO 2014 Moscow, Russia
7. World Economic forum 2014 Abuja, Nigeria (Sunil Bharti Mittal was the COChairperson this year)
8. Internet Governance Forum 2014 Istanbul, Turkey
9. NAM (Non Aligned Movement) Summit 2015 Venezuela.
10. 83rd Interpol General Assembly- Monaco

SCO Summit:
13 Summit 2013-Bishkek (Kyrgyzstan) Attended by: Salman Khurshid (Foreign Minister)
12 Summit 2012-Beijing. Attended by: SM Krishna (Foreign Minister)

NAM Summit:
16 Summit 2013: Tehran, Iran
17 Summit 2015 - Caracas (Venezuela)
Note: Two nations, namely Azerbaijan Republic and Fiji, were accepted as the new members of the organization.
Theme: Lasting Peace through Joint Global Governance.

NEW MEMBER
1. United Nation – South Sudan new member country . Total– 193 3. World Bank & IMF – South Sudan new member country. Total– 188
members members
2. WTO –Tajikistan new member country. Total – 159 members. 4. European Union – Croatia new member country. Total– 28

1. Malta to Host Next Commonwealth Summit in 2015: Malta, a
Southern European country was on 17 November 2013 unanimously
chosen as the host of the next Commonwealth summit in 2015.
Note: This is second time for Malta to host the Commonwealth
summit. Before this, Malta hosted a Commonwealth Summit in 2005.
World Agricultural Forum Congress (WAF) will be organized at
Hyderabad
2. The 12th edition of Pravasi Bharatiya Divas (PBD) was held at New
Delhi in 2014, and was attended by 1,500 delegates from 51
countries.

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Note: The 12th edition of Pravasi Bharatiya Divas (PBD) theme of the
convention is -Engaging Diaspora - Connecting across Generations.
1. 44th International film festival held at Panjim Goa from November
20, 2013.
2. 34th India International Trade Fair (IITF) 2014, at its known location
Pragati Maidan New Delhi, during 14-27 November 2014, with
“Women Entrepreneurs” theme.
3. Regional Pravasi Bhartiya Divas was held in Sydney, Australia.
4. The 10th World Islamic Economic Forum to be held from October
2014 at Dubai.
5. First-ever India International Bullion Summit to be held in Mumbai.
BBA President Mohit Kamboj.
6. 7th India-Russia Trade Investment Forum held in St. Petersburg
7. Kochi to host “Reel Earth” Environmental film festival in October.
8. The 7th Regional Pravasi Bhartiya Divas will be held in Sydney.
9. UN Human Rights forum held in Beijing (CHINA)
10. World Economic Forum’s “summer Davos” meeting held in the
north-eastern Chinese city of Dalian ( China).
11. 31st meeting of Health Ministers of WHO South-East Asia
countries held in India.
12. Sixth Global Skills Summit held in New Delhi. The Theme of the
Summit is “Industry Leads”. New Zealand is the country partner this
time for the Summit.
13. Arab league Summit 2014 - Kuwait City.
14. 6 IBSA Summit 2013 – New Delhi
15. 2014 Mrs India International will be held place in Kolkata.
16. United Nation conference on Sustainable Development (2012)-
Rio de Janeiro
17. The international biodiversity meet– Hyderabad
18. UN biodiversity meet in 2014 -South Korea
19. 58th Commonwealth Parliamentarian conference (2012) held in
Colombo. Johannesburg, South Africa (2013).
20. Organization of Islamic Co-operation (OIC) summit (2013)– Cairo
(Egypt)

BANKS WITH CEO/HEADS, HEADQUARTERS, YEAR OF ESTABLISHMENT, SLOGANS/TAGLINES

PUBLIC SECTOR BANKS

S.NO Bank Name Headquarters Tagline/Slogan Chairmen
1 Allahabad Bank Kolkata A tradition of trust Rakesh Sethi
2 Andhra Bank Hyderabad Much more to do. With YOU in focus C.V.R RAjendran
3 Bank of Baroda Vadodara India’s International Bank S.S. Mundra
4 Bank of India Mumbai Relationships beyond Banking V.R.Iyer
5 Bank of Maharashtra Pune One Family One Bank Sushil Muhnot
6 Canara Bank Bangalore It’s easy to change for those who you R.K.Dubey
love, Together we Can
7 Central Bank of India Mumbai Build A Better Life Around Us, Central to Rajeev Rishi
you since 1911
8 Corporation Bank Mangalore Prosperity for all Sadhu Ram Bansal
9 Dena Bank Mumbai Trusted Family Bank Aswini Kumar
10 Indian Bank Chennai Taking Banking Technology to Common T.M.Bhasin
Man, Your Tech-friendly bank
11 Indian Overseas Bank Chennai Good people to grow with M.Narendra
12 Oriental Bank of New Delhi Where every individual is committed S.L.Bansal
Commerce
13 Punjab National Bank New Delhi The Name you can Bank Upon K.R.Kamath
14 Punjab & Sind Bank New Delhi Where series is a way of life Jatinder Bir Singh
15 Syndicate Bank Manipal Your Faithful And Friendly Financial Sudhir Kumar Jain
Partner
16 Union Bank of India Mumbai Good people to bank with Arun Tiwari
17 United Bank of India Kolkata The Bank that begins with “U” Vacant
18 UCO Bank Kolkata Honors Your Trust Arun kaul
19 Vijaya Bank Bangalore A friend You can Bank Upon V. Kannan
20 IDBI Bank Ltd Mumbai Banking for all; “ Aao Schein Bada” M.S. Raghavan
21 Bharatiya Mahila Bank New Delhi Empowering women, Empowering India Usha Ananthasubramanyan
State Bank Group
1 State Bank of India Mumbai The Nation banks on us; Pure Banking Arundhati Bhattacharya
Nothing Else; With you all the way
2 State Bank of Bikaner Rajasthan Arundhati Bhattacharya
& Jaipur
3 State Bank of Patiala Punjab Blending Modernity with Tradition Arundhati Bhattacharya
4 State Bank of Hyderabad You can always bank on us Arundhati Bhattacharya
Hyderabad
5 State Bank of Mysore Bangalore Working for a better tomorrow Arundhati Bhattacharya
6 State Bank of Thiruvananthapuram A Long Tradition of Trust Arundhati Bhattacharya
Travancore

PRIVATE SECTOR BANKS

S.No Bank Name Headquarters Tagline/Slogan
1 Catholic Syrian Bank Thrissur support all the way
2 City Union Bank Kumbakonam
3 Dhanalakshmi Bank Thrissur
4 Federal Bank Aluva, Kochi Your Perfect Banking Partner
5 ING Vysya Bank Bangalore
6 Jammu & Kashmir Bank Srinagar Serving to Empower

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7 Karnataka Bank Mangalore Your Family Bank Across India
8 Karur Vysya Bank Karur Smart Way to Bank
9 Lakshmi Vilas Bank Karur
10 Nainital Bank Nainital
11 Ratnakar Bank Kolhapur
12 South Indian Bank Thrissur
13 Tamilnad Mercantile Bank Tuticorin Be a step ahead of Life
14 Axis Bank Mumbai Badhti Ka naam Zindagi
15 Development Credit Bank Mumbai
16 HDFC Bank Mumbai We Understand your world
17 ICICI Bank Mumbai Hum Hai Na, Khyal Apka
18 IndusInd Bank Mumbai
19 Kotak Mahindra Bank Mumbai
20 Yes Bank Mumbai Experience our Expertise

FOREIGN BANKS
S.No Bank Name Headquarters Tagline/Slogan
1 AB Bank Ltd Mumbai
2 ABN-AMRO Bank N.V Amsterdam Making more possible
3 Abu Dhabi Commercial Bank Ltd Abu Dhabi Long Life Ambition
4 American Express Banking Corp New York
5 Antwerp Diamond Bank NV Antwerp
6 BNP Paribas Paris The bank for a changing world
7 Bank of America N.T. & S.A Charlotte, North Carolina
8 Bank of Bahrain & Kuwait B.S.C Manama, Bahrain
9 Bank of Ceylon Colombo
10 Bank of Nova Scotia Toronto, Ontario
11 Barclays Bank PLC London
12 Calyon Bank Paris
13 Chinatrust Commercial Bank Taipei, Taiwan
14 Citibank N.A New York
15 Deutsche Bank (Asia) Frankfurt
16 DBS Bank Ltd Singapore Living, Breathing Asia
17 HSBC Ltd London
18 JPMorgan Chase Bank New York
19 JSC VTB Bank Moscow
20 Krung Thai Bank Public Co. Ltd Bangkok
21 Mashreq Bank PSC Dubai
22 Mizuho Corporate Bank Ltd Tokyo
23 Oman International Bank S.A.O.G
24 Shinhan Bank Seoul The Bank of Pride
25 Societe Generale Paris Building team spirit together
26 Sonali Bank Dhaka Your Trusted Partner in Innovative Banking
27 Standard Chartered Bank London
28 State Bank of Mauritius Ltd
29 The Bank of Tokyo-Mitsubishi UFJ, Ltd Tokyp
30 UBS AG Basel and Zürich We Will Not Rest

REGIONAL RURAL BANKS

S.No. RRB’s Sponsor Bank State
1 Allahabad UP Gramin Bank Allahabad Bank Uttar Pradesh
2 Andhra Pradesh Grameena Vikas Bank State Bank of India Andhra Pradesh
3 Andhra Pragathi Grameena Bank Syndicate Bank Andhra Pradesh
4 Arunachal Pradesh Rural Bank State Bank of India Arunachal Pradesh
5 Aryavart Gramin Bank Bank of India Uttar Pradesh
6 Assam Gramin Vikash Bank United Bank of India Assam
7 Baitanri Gramya Bank Bank of India Orissa
8 Ballia Etawah Gramin Bank Central Bank of India Uttar Pradesh
9 Bangiya Gramin Vikash Bank United Bank of India West Bengal
10 Baroda Gujarat Gramin Bank Bank of Baroda Gujarat
11 Baroda Rajasthan Gramin Bank Bank of Baroda Rajasthan
12 Baroda UP Gramin Bank Bank of Baroda Uttar Pradesh
13 Bihar Kshetriya Gramin Bank UCO Bank Bihar
14 Cauvery Kalpatharu Grameena Bank State Bank of Mysore Karnataka
15 Chaitanya Godavari Grameena Bank Andhra Bank Andhra Pradesh
16 Chhatisgarh Gramin Bank State Bank of India Chhatisgarh
17 Chikmagalur Kodagu Grameena Bank Corporation Bank Karnataka
18 Deecan Grameena Bank State Bank of Hyderabad Andhra Pradesh
19 Dena Gujarat Gramin Bank Dena Bank Gujarat

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20 Durg Rajnandgaon Gramin Bank Dena Bank Chhatisgarh
21 Ellaquai Dehati Bank State Bank of India Jammu & Kashmir
22 Gurgaon Gramin Bank Syndicate Bank Haryana
23 Hadoti Kshetriya Gramin Bank Central Bank of India Rajasthan
24 Haryana Gramin Bank Punjab National Bank Haryana
25 Himachal Gramin Bank Punjab National Bank Himachal Pradesh
26 J&K Grameen Bank J&K Bank Ltd. Jammu & Kashmir
27 Jaipur Thar Gramin Bank UCO Bank Rajasthan
28 Jhabua Dhar Kshetriya Gramin Bank Bank of Baroda Madhya Pradesh
29 Jharkhand Gramin Bank Bank of India Jharkhand
30 Kalinga Gramya Bank UCO Bank Orissa
31 Karnataka Vikas Grameen Bank Syndicate Bank Karnataka
32 Kashi Gomti Samyut Gramin Bank Union Bank of India Uttar Pradesh
33 Krishna Grameena Bank State Bank of India Karnataka
34 Kshetriya Kisan Gramin Bank UP State Cooperative Bank Uttar Pradesh
35 Langpi Dehangi Rural Bank State Bank of India Assam
36 Madhya Bharath Gramin Bank State Bank of India Madhya Pradesh
37 Madhya Bihar Gramin Bank Punjab National Bank Bihar
38 Mahakaushal Kshetriya Gramin Bank UCO Bank Madhya Pradesh
39 Maharashtra Gramin Bank Bank of Maharashtra Maharashtra
40 Malwa Gramin Bank State Bank of Patiala Punjab
41 Manipur Rural Bank United Bank of India Manipur
42 Meghalaya Rural Bank State Bank of India Meghalaya
43 Mewar Anchalik Gramin Bank Bank of Rajasthan Rajasthan
44 MGB Gramin Bank State Bank of Bikaner and Jaip uRajasthan
45 Mizoram Rural Bank State Bank of India Mizoram
46 Nagaland Rural Bank State Bank of India Nagaland
47 Nainital Almora Kshetriya Bank Bank of Baroda Uttarakhand
48 Narmada Malwa Gramin Bank Bank of India Madhya Pradesh
49 Neelachal Gramya Bank Indian Overseas Bank Orissa
50 North Malabar GraminBank Syndicate Bank Kerala
51 Pallavan Grama Bank Indian Bank Tamil Nadu
52 Pandyan Grama Bank Indian Overseas Bank Tamil Nadu
53 Parvatiya Gramin Bank State Bank of India Haryana
54 Paschim Banga Gramin Bank UCO Bank West Bengal
55 Pragathi Gramin Bank Canara Bank Karnataka
56 Prathma Bank Syndicate Bank Uttar Pradesh
57 Puduvai Bharthiar Grama Bank Indian Bank Puducherry
58 Punjab Gramin Bank Punjab National Bank Punjab
59 Purvanchal Gramin Bank State Bank of India Uttar Pradesh
60 Rajasthan Gramin Bank Punjab National Bank Rajasthan
61 Rewa Sidhi Gramin Bank Union Bank of India Madhya Pradesh
62 Rushikulya Gramya Bank Andhra Bank Orissa
63 Samastipur Kshetriya Gramin Bank State Bank of India Bihar
64 Saptagiri Grameena Bank Indian Bank Andhra Pradesh
65 Sarva UP Gramin Bank Punjab National Bank Uttar Pradesh
66 Satpura Narmada Kshetriya Gramin Bank Central Bank of India Madhya Pradesh
67 Saurashtra Gramin Bank State Bank of Saurashtra Gujarat
68 Sharda Gramin Bank Allahabad Bank Madhya Pradesh
69 Shreyas Gramin Bank Canara Bank Uttar Pradesh
70 South Malabar Gramin Bank Canara Bank Kerala
71 Surguja Kshetriya Gramin Bank Central Bank of India Chhatisgarh
72 Sutlej Gramin Bank Punjab and Sind Bank Punjab
73 Tripura Gramin Bank United Bank of India Tripura
74 Utkal Gramya Bank State Bank of India Orissa
75 Uttar Banga Kshetriya Gramin Bank Central Bank of India West Bengal
76 Uttar Bihar Gramin Bank Central Bank of India Bihar
77 Uttaranchal Gramin Bank State Bank of India Uttarakhand
78 Vananchal Gramin Bank State Bank of India Jharkhand
79 Vidharbha Kshetriya Gramin Bank Central Bank of India Maharashtra
80 Vidisha Bhopal Kshetriya Gramin Bank State Bank of Indore Madhya Pradesh
81 Visveshvaraya Grameena Bank Vijaya Bank Karnataka
82 Wainganga Krishan Gramin Bank Bank of India Maharashtra

WORLD STOCK EXCHANGES INDEX

Country Index Name Japan Nikkei
India Sensex Russia Micex
United States Dow Jones, NASDAQ Germany (Frankfurt) MID Dax

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Hong Kong HANG SENG
Italy MIBTEL
Canada S&P/TSX
Singapore SIMEX, STRAITS Times
United Kingdom FTSE-100
South Korea KOSPI
Note: Top 5 World Stock Exchange:
1. New York Stock Exchange (NYSE) - New York 3. Tokyo Stock Exchange (Japan)
2. NASDAQ (New York) 4. London Stock Exchange 5
Chapter-21
FINANCE COMMISSION
The government constituted the 14th Finance Commission under the
submit its report by October 31, 2014.
What Is The Role Of Finance Commissions?
A finance commission is set up very five years by the President under
Article 280 of the Constitution. Its main function is to recommend how
the Union government should share taxes levied by it with the states.
These recommendations cover a period of five years. The commission
also lays down rules by which the centre should provide grants-in-aid
to states out of the Consolidated Fund of India. It is also required to
suggest measures to augment the resources of states and ways to
supplement the resources of panchayats and municipalities.
Why Does The Constitution Provide For Sharing Of Tax Proceeds?
Under the federal structure envisaged in the Constitution, most of the
taxation powers are with the Centre but the bulk of spending is done
by the states. Such a federal structure requires transfer of resources
from the Centre, which levies and collects the big taxes such as
income tax and indirect taxes like excise and customs, to the states.
Canada and Australia, which also have federal governments, have a
similar tax-sharing system.
Chapter-22
CASA
What is CASA Ratio?
Casa is basically the current and savings sccount deposits. Casa ratio
is the share of current and savings account deposits to the total
deposits of the bank. In India, interest rates paid on current and
savings account deposits is administered by banking regulator - the
Reserve Bank of India
Why are banks keen on garnering a higher share of CASA? Answer
Interest rate paid on Casa is much lower compared to other deposits
like term deposits or recurring deposits. While banks do not pay any
interest on current account, interest paid on savings account deposit
is 4%. Banks therefore make maximum effort to increase the share of
Casa on their books to reduce their overall cost of deposits. The State
Bank of India has the highest share of Casa to total deposits at 46.6%,
followed by HDFC Bank at 43.7% and ICICI Bank at 43.3%
What does CASA mean for customers?
Recently, RBI increased interest paid on savings account deposits
from 3.5% to 4%. Further a year ago, RBI told banks to pay interest on
SOME IMPORTANT TOPICS
Friends.. As you Prime Minister Narendra Modi on 8 April 2015
launched the Mudra Bank to help small entrepreneurs get loan
to start a business. With much hype we read/heard in newspapers
and media the word 'Mudra Bank'. But we know still many of you
might be wondering what this bank is all about..as we were to be
frank :). This post is for those.. Let's look at what this Mudra Bank is?
122
Australia S&P/ASX
Malaysia KLSE
Thailnad SET
Saudi Arabia TASI
Pakistan KSE -100
Indonesia JCI
5. Shanghai Stock Exchange (China)
chairmanship of former RBI Governor YV Reddy. The commission will
Can The Commission Examine Other Fiscal Issues As Well?
Yes. The government can ask the commission to make suggestions on
specific fiscal issues that it may want addressed. For instance, the
government has asked the 14th Finance Commission to deliberate on
the level of subsidies and explore statutory measures to insulate
pricing of public utility services like drinking water, irrigation, power
and public transport from policy fluctuations. The new commission
will also look at the impact of GST and suggest a mechanism to
compensate states in case of revenue loss. Besides, it will deliberate
on listing, disinvestment and sale of state-owned companies.
What Is The Force Of The Commission's Recommendations?
The Constitution does not make the recommendations of the Finance
Commission binding on the government of the day. However, there is
a strong precedent that governments generally go by the suggestions
as far as sharing of revenues is concerned. These recommendations
relating to distribution of Union taxes and duties and grants-in-aid are
usually implemented by a presidential order.
savings deposits on a daily basis rather than paying on the minimum
balance maintained by them in six months. As a result, savings
account customers earn better returns compared to what they
earned a year ago. Further, interest earned on savings account
deposits does not attract TDS (tax deduction at source). Interest
income above 10,000 a year attracts TDS of 10% in case of term
deposits. However, there is no major benefit for current account
deposits, which is mainly maintained by corporates and traders.
What are the disadvantages of high CASA?
These deposits can move out of banks' books anytime, leading to
asset-liability mismatches. While in case of term deposits, banks are
almost certain that the depositor may not withdraw money before
the maturity of the deposit and may also renew the deposit on
maturity. Further, to finance long-term projects, banks need to have
long-term liabilities on their books to avoid mismatches. Banks
cannot rely on Casa deposits to fund long-term loans
KNOW ABOUT MUDRA BANK FOR COMPETITIVE EXAMS
Facts you should know about MUDRA BANK
1) This Bank is another leap forth to accelerate the ‘Make in India’
process launched by Prime Minister, Narendra Modi on 25 September
2014.
2) What does MUDRA stand for? - Mudra Bank stands for Micro Units
Development Refinance Agency (MUDRA). Mudra in Hindi means
monetary capital.
3) Mudra is a bank that is set up solely to encourage small
entrepreneurs from urban and rural regions. The initiative has been
taken with an intention to bring entrepreneurs from across the
country into mainland business.
4) How is Mudra Bank set up? - The bank launched by the Prime
Minister, Mudra is being set up through a statutory enactment.
Mudra Bill will be brought into the Parliament within 6-12 months
and it will incorporate theprovisions of the Micro Finance Institutions
(MFI) Bill. It has been registered as a company and an NBFC under the
Reserve bank of India.
5) What is the aim of MUDRA Bank? - Aim is to provide financial
assistance to the "unfunded" small entrepreneurs who provide
employment to a large number of people.
5) Under which Yojana Mudra Bank is set up? - Pradhan Mantri Micro
Units Development Refinance Agency (MUDRA) Yojana
6) Who is the CEO of Mudra Bank? - One of the Chief General
Managers of Nabard, Jiji Memon, has been appointed CEO of the
institution.
* Mufti Mohammad Sayeed - Sworn in as the Chief Minister of
Jammu and Kashmir.
* Martin Crowe - Former New Zealand cricket captain, inducted into
the ICC Cricket Hall of Fame.
* Roger Federer - Won the ATP Tennis Championship Men’s single
title held in Dubai.
* Jitan Ram Manjhi - Former Bihar chief minister, he launched
Hindustani Awam Morcha.
* Jagmohan Dalmiya - He was unanimously elected the president of
the BCCI.
* Bill Gates - He was named world's richest person again.
* Hifikepunye Pohamba - Namibian President, he won Mo Ibrahim
prize for African leadership.
* Rafael Nadal - He won Argentina Open tennis title.
* Mary Kom - (i) She was appointed as the brand ambassador of the
Northeast (ii) She has decided to quit boxing after the 2016 Rio
Olympic Games.
* K.S. Lavkumar - Renowned ornithologist, he died.
* Rani Mukerji - She was was felicitated by Sreerupa Mitra
Chaudhury who is the chairperson for the National Institute of
Gender Justice for her contribution towards gender sensitization
through her 2014 release Mardaani.
* Dadarao Danve - He resigned from the Union council of Ministers
as he was made Maharasthra BJP president.
* Leslee Udwin - Director of the controversial BBC documentary film
“India’s Daughter”.
* Narendra Modi - (i) Named among the 30 most influential people
on the internet by Time magazine. (ii) He became first Indian PM
to visit Sri Lanka in 28 years. (iii) He was named among the 50
greatest leaders in the world by Fortune magazine.
* Ram Sundar Das - Former Bihar Chief Minister, he passed away.
* G Karthikeyan - Kerala Assembly speaker, he passed away.
* Saina Nehwal - (i) She created history as she became the first Indian
woman shuttler to attain the world number one ranking. (ii) Became
the first Indian in 14 years to reach the final of the All England Open
Badminton Championships (iii) She won Indian Open Super Series
title.
123
7) Mudra bank aims at catering to the needs of as many as 5. 77 crore
small business spread across India.
8) Mudra Bank will be set up with a corpus of Rs.20,000 crore and a
creditguarantee fund of Rs.3,000 crore. It can lend between Rs
50,000 and Rs 10 lakh to small entrepreneurs.
9) As the objective is to encourage small businessmen, the bank will
not just provide monetary help but will nurture them
through different stagesof growth and development of businesses as
Sishu, Kishor and Tarun.
10) What is Sishu? - Nascent businesses which are just starting up will
be considered as Sishu businesses. Sishus loan cover will be up to
Rs.50, 000.
11) What is Kishor? - As the industries witness their initial profits they
are regarded as Kishor industries. In this phase they are eligible for a
loan ranging from 50, 000 to 5, 00, 000 lakh.
12) What is Tarun? - This is the final and progressive stage which if
achieved by the businesses will be eligible for loan up to 10 lakh.
13) Background of setting up this Bank? - Union Finance Minister
Arun Jaitley had proposed the creation of a Micro Units Development
Refinance Agency (MUDRA) Bank during the presentation of Union
Budget 2015-16 on 28 February 2015.
PERSONS IN NEWS- MARCH 2015
* Ashwin Mittal - Walmart India has appointed him as chief operating
officer.
* Vinod Mehta - Veteran journalist, he passed away.
* Kumar Sangakkara - (i) Heannounced retirement from Test cricket,
(ii) He became the first player to score four successive one-day
international centuries.
* Arun Singh - He was appointed as India’s ambassador to the U.S.
* Veerappa Moily - He was selected for Saraswati Samman 2014.
* MS Dhoni - (i) He registered most wins by an Indian captain in the
history of the cricket World Cup. (ii) He Became first Indian captain to
register 100 ODI wins.
* Dr. Manmohan Singh - He was accused of criminal conspiracy and
breach of trust in the allocation of a coal mine by Special CBI Court.
* David Hale - He was nominated as next US ambassador to Pakistan.
* N. Sakthan - He was elected Kerala Assembly Speaker.
* Mohamed Nasheed - Former Maldives President, he was
sentenced to 13-year imprisonment.
Prepared by: www.currentaffairs4examz.com
* Dr. Alka Beotra - She was nominated to the Executive Board of
WAADS (World Association of Anti Doping Scientists) from India.
* Bhaiyyaji Joshi - He was re-elected RSS general secretary.
* Sonakshi Sinha & Arjun Kapoor: They won Golden Kela awards
(Worst offerings of Indian cinema).
* K. Srikanth - (i) He won Swiss Grand Prix Gold Badminton
championship (ii) He won Indian Open Super Series title.
* Narayan Desai - Veteran Gandhian, he passed away.
* Lewis Hamilton - He won Australian Grand Prix 2015.
* Christine Lagarde - IMF chief, she visited India during March 2015.
* Paul van Ass - He took charge as chief coach of the Indian men’s
hockey team.
* Bombay S Kamal - Veteran singer and music compose from
Malayalam, he passed away.
* Ashu Suyash - Took charge as Crisil (Credit Rating Information
Services of India Limited) CEO.
* Minoti Apate - Indian pancreatic cancer researcher in Australia and
she has been named New South Wales Woman of the year 2015.
* Benjamin Netanyahu - His right-wing Likud party swept past its
main rival in Israel's election.
* Kavinder Gupta - He was elected as the speaker of the Jammu and
Kashmir legislative assembly.
* Air Marshal Sohail Aman - He was appointed as Chief of Pakistan
Air Force.
* Smriti Irani - WEF named her as Young Global Leader from India.
* Ratan Tata - He was appointed as the head of an innovation council
of Indian Railways called ‘Kayakalp’.
* Meira Kumar - Former Lok Sabha Meira Kumar’s book entitled
“Indian Parliamentary Diplomacy – Speaker’s Perspective” was
released.
* Sir Venkatraman Ramakrishnan - India-born Nobel laureate Sir
Venkatraman Ramakrishnan has been confirmed as president elect of
Britain's prestigious Royal Society.
* Justice Uma Nath Singh - Sworn in as new Chief Justice of
Meghalaya High Court.
* Lata Mangeshkar - She won the 'Laadli Voice of the Century' award.
* Shahir Krishnarao - Bard and Marathi folk legend, he passed away.
* Martin Guptill - He hit the highest ever World Cup score of 237.
* Rajendra Singh - Activist Rajendra Singh won Stockholm Water
Prize 2015.
* Katherine Viner - She will be the next editor-in-chief of The
Guardian & will be the first woman to run the newspaper in its 194-
year history.
* Yusufali Kechery - Renowned Malayalam poet, he passed away.
* Sarath Fonseka - He became Sri Lanka's first field marshal.
* Sania Mirza & Martina Hingis - They won BNP Paribas Open tennis
title.
* Lee Kuan Yew - The founding father and first prime minister of
Singapore. He passed away.
* Novak Djokovic - He won BNP Paribas Open final.
* Shashi Kapoor - Selected for Dadasaheb Phalke award 2014.
* Madhav Gadgil - Renowned ecologist, he won prestigious Tyler
Prize 2015 for Environmental Achievement.
* Dolly Shivani Cherukuri - She became the youngest Archer to enter
India Book of Records.
* Bharti Kher - She was conferred with the Knight of the Order of Arts
and Letters of France.
* KM Mani - Kerala Finance Minister, he was appointed chairman of
the empowered committee of state finance ministers on Goods &
Services Tax (GST).
ICC CRICKET WORLD CUP 2015 QUIZ QUESTIONS FOR EXAMS
Friends.. As you know the 11th edition of the ICC Cricket World Cup
was held from 14 February to 29 March 2015. Many new records
were created during this world cup and hence a question related to
Cricket World Cup will surely be there in the upcoming exams. Hope
this article helps you to face those questions with confidence. If you
think any possible question was missed out, just comment below. We
will add them.
1) The 2015 Cricket World Cup was jointly hosted by? - Australia and
New Zealand
2) How many teams participated in the tournament? - Fourteen
teams
3) Total how many venues were there for the 2015 Cricket World
Cup? - 14
4) When was the first and last time Australia and New Zealand jointly
hosted the Cricket World Cup? - 1992
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* Akhil Sharma - Indian-American author, he won The Folio Prize
2015.
* Gopaldas Neeraj - Veteran poet, he was awarded inaugural
National Kavi Pradeep Samman by Madhya Pradesh govt.
* Vikas Swarup - Noted novelist, he was appointed as the new official
spokesperson of the Ministry of External Affairs.
* Ruth Porat - Google Inc appointed Ruth Porat as its Chief Financial
Officer.
* Justice Ashok Bhushan - He sworn in as the Chief Justice of Kerala
High Court.
* Michel Platini - He was re-elected as the UEFA President.
* John F. Nash, Jr. and Louis Nirenberg - They shared Abel Prize 2015.
* Atal Bihari Vajpayee - Former Prime Minister Atal Bihari Vajpayee
was presented with the prestigious Bharat Ratna Award on 27 March
2015.
* Lieutenant Kiran Shekhawat - She became the first Indian woman
officer to die in the line of duty.
* Poonam Mahajan - She became the first woman president of
Basketball Federation of India.
* Aziz Qureshi - Mizoram Governor Aziz Qureshi sacked.
* Medha Patkar - Social activist Medha Patkar quits Aam Aadmi
Party.
* Michael Clarke - Australia captain Michael Clarke announced
retirement from ODIs.
* Aditi Arya - She was declared fbb Femina Miss India World 2015.
* Adoor Gopalakrishnan - He was honoured with Bishwaratna Dr
Bhupen Hazarika International Solidarity Award.
* Mitchell Starc - He was named Player of the ICC Cricket World Cup
2015 tournament.
* Sebastian Vettel - He won Malaysian Grand Prix 2015.
* Pandit Madan Mohan Malviya - He was posthumously awarded
Bharat Ratna Award & his family members received the award from
President on 30 March 2015.
* Balbir Singh Senior - Renowned Hockey player, he was honoured
with Major Dhyan Chand Lifetime Achievement Award.
* Daniel Vettori - New Zealand cricketer, he announced retirement
from international cricket.
* Muhammadu Buhari - He was elected as President of Nigeria.
5) Who was the Ambassador of the 2015 ICC Cricket World Cup? -
Sachin Tendulkar
6) Which ground hosted the final match of the tournament? -
Melbourne Cricket Ground, Australia
7) Which team lifted the 2015 ICC Cricket World Cup? - Australia
8) The final match was played between Australia and? - New Zealand
9) Who was the leading run scorer (547 runs) of the Cricket world cup
2015? - Martin Guptill
10) Who scored the highest individual score of Cricket world cup
2015? - Martin Guptill (237 Runs)
11) Which player had the highest average of Cricket world cup 2015?
- Kumar Sangakkara (108.2)
12) Which player scored the most number of 100s in Cricket world
cup 2015? - Kumar Sangakkara (Four)
13) Which players took the most number of wickets in Cricket world
cup 2015? - Mitchell Starc and Trent Boult (22 wickets each)
14) Who took the most number of wickets in a single innings of
Cricket world cup 2015? - Timothy Southee (7/33 against England)
15) Name the two players who scored double century in Cricket world
cup 2015? - Martin Guptill and Chris Gayle
16) Which is the only test playing nation that did not qualified for
quarter finals? - England
17) Who was named the player of the Tournament? - Mitchell Starc
18) Name the two players who took a hat-trick in the World
Cup 2015? - Steve Finn and JP Duminy
19) Who scored the fastest World Cup fifty in 18 balls during this
edition? - McCullum
*The 2015 Australian Open took place at Melbourne Park, Australia
between 19 January to 1 February 2015. It was the 103rd edition of
the Australian Open, and the first Grand Slam tournament of the year
2015. Stan Wawrinka was the defending champion in men's singles
but lost to four-time Australian Open champion Novak Djokovic in the
semi-finals. Reigning women's champion Li Na did not defend her
title, as she retired from professional tennis in September, 2014.
* This year Novak Djokovic won an Open Era record fifth men's
singles crown by defeating Andy Murray in the finals. Serena Williams
won an Open Era record six women's singles championships by
defeating Maria Sharapova in the finals.
Here is the complete list of winners with details
1) On which date Union Budget 2015-16 was presented in
Parliament? - 28 February 2015
2) Name the Union Finance Minister who presented the Union
Budget 2015-16 in Parliament? - Arun Jaitley
3) Personal Income Tax limit was not changed in Union Budget 2015-
16. What is the present Personal I-T exemption limit? - Rs 2.5 lakh
4) Health Insurance Premium deduction hiked from Rs. 15,000 to? -
Rs. 25,000 (for senior citizens to Rs. 30,000)
5) Transport allowance exemption hiked to Rs. 1,600, from ____ per
month? - Rs. 800
6) PAN card is must for all purchase above ____ rupees as proposed
in Budget 2015-16? - Rs. 1 lakh
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20) Who hit the fastest 150 in ODIs (in 64 balls) during this edition of
World Cup? - AB de Villiers
21) Which team defeated India in the Semi Finals of Cricket world cup
2015? - Australia
22) Who became the first Indian to score a World Cup century against
Pakistan during this edition? - Virat Kohli
24) Who was named the Man of the Match in the final of Cricket
world cup 2015? - James Faulkner
25) Who captained Australia in the Cricket world cup 2015? - Michael
Clarke
AUSTRALIAN OPEN 2015- COMPLETE WINNERS LIST PDF
Men's Singles
Final between: Novak Djokovic (Serbia) vs Andy Murray (UK)
Winner: Novak Djokovic (7–6(7–5), 6–7(4–7), 6–3, 6–0)
Women's Singles
Final between: Serena Williams (United States) vs Maria Sharapova
(Russia)
Winner: Serena Williams (6–3, 7–6(7–5))
Men's Doubles
Final between: Simone Bolelli (Italy) & Fabio Fognini (Italy) vs Pierre-
Hugues Herbert(France) & Nicolas Mahut(France)
Winners: Simone Bolelli & Fabio Fognini (6–4, 6–4)
Women's Doubles
Fianl between: Bethanie Mattek-Sands (USA) & Lucie Šafářová (Czech
Republic) vs Chan Yung-jan (Chines Taipei) & Zheng Jie (China)
Winners: Bethanie Mattek-Sands & Lucie Šafářová (6–4, 7–6(7–5))
Mixed Doubles
Final between: Martina Hingis (Switzerland) & Leander Paes (India) vs
Kristina Mladenovic (France) & Daniel Nestor (Canada)
Winners: Martina Hingis & Leander Paes (6–4, 6–3)
QUIZ QUESTIONS ON BUDGET 2015-16
7) An additional ___% surcharge on people earning over Rs. 1 cr was
put forth in the budget 2015-16? - 2%
8) Wht change was made in the Wealth tax? - Wealth tax abolished
9) DTC was dropped in the Budget 2015-16. Expand DTC? - Direct
Taxes Code
10) Corporate tax to be reduced from 30% to ___ over next four
years? - 25%
11) Mudra banks to be established with capital of Rs.___ crore? -
20000
12) Rs. ____ deduction for contribution to New Pension Scheme? - Rs.
50,000
13) GAAR implementation deferred by 2 years to? - April 2017
14) Service Tax rate hiked to ___% from 12.36%? - 14%
15) Tax free bonds were proposed in budget for? - Roads, railways,
irrigation projects
16) As per Budget 2015-16 proposal, GST (Goods and Services Tax) to
be put in place by? - April 1, 2016
17) ____% deduction for contribution to Swachh Bharat, Clean Ganga
projects were announced in Budget 2015? - 100%
18) Which tax was abolished in Budget 2015? - Wealth Tax
19) Additional ____ % surcharge for the super rich with income of
over Rs. 1 crore were announced in Budget 2015? - 2%
20) Tax slabs were not changed in Union Budget 2015-16. True
or False? - True
21) Service tax was increased to ____ per cent in Budget 2015-16? -
14%
22) Rs. _____ crore were announced in Budget 2015 for Rural
Infrastructure Development Bank? - 25,000
23) ______ Mission to be established to draw on expertise of
entrepreneurs, and researchers to foster scientific innovations? - Atal
Innovation Mission
GOVERNMENT SCHEMES - CENTRAL AND STATE GOVT. YOJANA
1. Pradhanmantri Jan-Dhan Yojana : To provide bank accounts,
insurance cover and a debit card to all Indian citizens. Here are some
benefits of this Government Scheme launched by PM Narender Modi.
It was launched on 15 August 2014.
Features and Highlights of Jan Dhan Yojna 2014 –
a. Jan Dhan Yojna account holders will be provided free zero-balance
bank account along with RuPay debit card. They will also be entitled
to accidental insurance cover of Rs 1 lakh.
b. Those people who open their account by January 26, 2015, they
will also be given life insurance cover of Rs 30,000.
c. After opening of account for 6 months, account holder can avail Rs
5,000 loan from the bank.
2. Krishi Amdani Beema Yojana : It is to help farmers don’t bear any
financial loss if their crops gets destroyed due to any reason like
unexpected weather.
3. PradhanMantri Gram Sinchai Yojana :
It was launched to boost agricultual yield.
4. Pradhan Mantri Saansad Adarsh Gram Yojana - Launched by PM
Modi, this scheme is an an ambitious village development project
under which each MP will take the responsibility of developing
physical and institutional infrastructure in 3 villages by 2019.
5. Project Uddan: The project was started to providing skills to 40,000
young people over a period of five years.
6. Mahatma Gandhi Pravasi Suraksha Yojana (MGPSY) : It is a pension
and life insurance scheme started by Indian government.
7. Rani Laxmi Bai Pension Scheme : It is a 'Special pension' scheme for
Muzaffarnagar riot victims announced by UP Govt.
8. Roshini Scheme : This yojana was launched for skill development
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24) AIIMS were announced in which states in Budget 2015-16? -
Jammu and Kashmir, Punjab, Tamil Nadu, Himachal Pradesh, Bihar
and Assam.
25) Which is the only state to get IIT as per Budget proposal 2015-16?
- Karnataka
26) Indian School of Mines in which place is proposed to be upgraded
to IIT? - Dhanbad
27) PG institute of Horticulture was announced in which city? -
Amritsar
28) University of Disability Studies was announced for which state? -
Kerala
29) Centre of film production, animation and gaming to come up in? -
Arunachal Pradesh
30) IIM was announced in which state? - Jammu and Kashmir and
Andhra Pradesh
and job placement for rural youth and women in maoist affected 24
districts in 9 states.
9. Free CFL bulb Scheme : It is a State Govt. scheme launched by
Tamil Nadu. Free CFL bulb scheme will provide free compact
fluorescent light (CFL) bulbs to over 14 lakh hut
dwellers in the state.
10. Vikram Unyogpuri : It is a Delhi-Mumbai industrial Corridor
project. It was launched in Madhya Pradesh.
11. Swavlamban Abhiyan : It was launched by PM Modi and have 11
welfare schemes of Gujarat government.
12. Anna Bhagya Scheme: It is a Karnataka
Government Scheme launched in Karnataka. It includes distribution
of 30 kg rice at one rupee per Kg to over 98 lakh BPL and Antyodaya
card holders in the state.
12. Rajiv Gandhi Jeevandayee ArogyaYojana:
A Health Insurance scheme launched in Maharashtra.
13. Amma Cement Scheme: This Scheme was launched by Tamil Nadu
Government. It will procure cement from private manufacturers and
sell them at Rs. 190 per bag.
14. Golden Girl (Bangaru Talli) Scheme: It was launched in Andhra
Pradesh to protect girl child and ensure their education.
15. Bhagat Puran Singh Sehat Beema Yojana (BPSSBY): Health
care scheme for BPL families launched in Punjab.
16. Annapurna: Under this government scheme, 10 kg of food grains
are provided to BPL households free of cost every month.