Professional Documents
Culture Documents
Enfo
Prologue
Those inquiring about Hindu science tech compilation, yes theyll come but not in a
next few weeks. Present schedule is
Remaining of June: [Current] series + Toppers interviews
Most of the July will be spent in doing Budget + Summaries of Economy
survey. (Survey alone is a project worth ~20 days headache).
After that Hindu science techs number will come. Thats probably July end or
August beginning.
anyways, Continuing from where we had left. Current Affairs May week1 (1-7)
1. History, Culture, Polity (coming soon)
2. Economy (youre here)
3. Diplomacy (done click me)
Questions
I. CSAT MCQ given at bottom of this article
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Bank can put restriction of money withdrawal e.g. not more than 500 in 24
hours.
Bank can decide minimum documents.
Now lets see pro and anti-arguments for group discussion / interview:
Pro arguments
This will bring uniformity in the bankaccounts. Some banks already offering
separate minor accounts e.g. Kotak Mahindras My Junior account.
Financial awareness, financial literacy: children learn about savings habit and
banking system.
Financial discipline: They understand the value of money and difference
between needs vs wants.
Financial inclusion: e.g. child-laborers in tea-stalls can save money.
Government directly sends scholarship money to such account.
Social change: many urban teenagers have broken family theyre pretty much
living on their own.
Anti-Argument
Children more Gullible, and likely to be victims of identity theft, hacking,
phishing.
They can become victim of miselling by private banks via Bancassurance,
mutual funds and hidden charges on credit card.
Therefore, RBI shouldnt have allowed the children to open accounts without
adult supervision.
Broker model
SBI ties up with LIC, orient life
insurance, SBI insurance and
many other companies.
Still SBI Bank officers can force
staff to promote only SBI
insurance products=> misselling chances high.
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75%
60%
50%
35%
25%
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55,000+ bank branches of Public sector banks, have not sold any insurance
policy. Therefore we cannot hope that broker model bancassurance will
automatically fix the problem of low insurance density.
Public awareness also necessary for improving insurance penetration.
Itll be better if IRDA+RBI worked together rather than making it a question
of ego/territorial supremacy.
Ownership
Chronology
1978
Act of 1981 (setup
in 1982)
July 1982
1988
1990
Organization
DICGC
100% RBI
Ownership
EXIM bank
100% Government
NABARD
National
housing Bank
SIDBI
100% RBI
Sarkaari banks and financial institutions
like SBI, LIC, IDBI
Mind it: weve only four All India financial institutions (AIFI) viz. EXIM,
NABARD, NHB and SIDBI.
Anyways, back to Deposit Insurance and Credit Guarantee Corporation (DICGC).
From the name, we can see it has two functions
1. Deposit insurance
2. Credit guarantee
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).
This Sinha-Mayaram panel recommended creating Financial Resolution
Authority FRA.
Functions:
1. Solve crisis in all financial institutions. Not just banking, but non-banking
financial institutions also e.g. Muthoot Gold Loans, Reliance Mutual funds.
2. FRA will protect all depositors (in banks) and all investors (in non-banking
function financial institutions)
3. FRA will subsume the above Deposit Insurance and Credit Guarantee
Corporation (DICGC)
4. WE need to create FRA, because all financial markets are interconnected. A
crisis in banking sector, can have negative fallout even on share market (and
thereby mutual funds), and vice versa.
5. This FRA will be independent of govt. and financial regulators (such as RBI,
SEBI, IRDA)
6. FRA can prevent bank failure, and reduce damage to economy
7. Apart from insurance premium, FRA can also arrange money by issuing
bonds (And that bond-money can be used for resucing the failed
bank/institution.
FRA
Financial resolution authority
Sinha-Mayaram panel under FSDC
recommended this.
For preventing collapse of financial
institutions -both banking and nonbanking.
By the way
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Setup in 2010
For coordination among regulatory bodies in financial sector. But it cannot
override the decision taken by an independent regulator (SEBI, RBI) etc. in
their own territory.
This body is only for coordination, consultation via meetings. (Desi liquor and
item songs options)
It has a sub-committee chaired by RBI governor. This is the first stop for
dispute resolution among regulators.
Coordinates with international bodies
Promotes financial literacy and financial inclusion.
Macro prudential supervision
~120 words.
Enforcement Directorate
This organization is important for GS2 (ministries & department) + GS3
(money laundering)
Why in news? Because 1st May 2014 was Enforcement day and President
gave speech. Structure and Functions of ED.
ED functions under Revenue department of Finance ministry.
ED Gets officers from custom and excise, Income tax department and various
police agencies.
HQ: Delhi. Offices spread across India
ED: Functions
ED enforces two acts
FEMA 1999
Civil law
Foreign Exchange Management
Act. Two basic premises
PMLA 2002
Criminal law
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owner of buysellbit.co.in
located in Abad (Mahim
Gupta)
Because RBI has not yet
legalized Bitcoins, yet this
gentleman was selling
bitcoins to people in
exchange of rupees. So in a
way he was acting as Forex
agent without license from
RBI!
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Foreign exchange
Minor account
Money laundering
multilateral cooperation
PMLA
Terror Financing
Bitcoin
Q5. Which of the following are legally required to get insurance on customer
deposits?
a.
b.
c.
d.
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Answer choices
a.
b.
c.
d.
only 1 and 3
only 1, 2 and 4
only 1, 3 and 4
only 1, 2 and 3
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Only 1 and 2
Only 2 and 3
Only 1 and 3
None of them
only 1
only 3
all of them
None of them
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9.
10.
11.
12.
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