U.N. report pegs India’s growth at 7.7% in 2012

India’s economic growth rate will remain subdued at 7.7 per cent in 2012 and 7.9 per cent in 2013, says a U.N. report.

“India’s economy is forecast to expand at a pace similar to 2011 in the following two years... at 7.7 per cent in 2012 and 7.9 per cent in 2013,” the U.N. report on ‘World Economic Situation and Prospects 2012’ said.

The report cautioned, “The downside risks to the regional outlook have sharply increased in recent months... particularly in case of India. Double-dip recessions in Europe and the United States would have a significant impact on economic activities across South Asia.”

The government recently lowered the GDP growth target for the current fiscal to 7 per cent from the earlier estimate of 8.5 per cent.

However, the study gave a positive outlook on South Asia’s economic growth prospects and projected that the region’s economies will grow by 6.7 per cent and 6.9 per cent in 2012 and 2013, respectively, accelerating beyond the 6.5 per cent growth rate experienced in 2011.

South Asia constitutes India, Pakistan, Nepal, Iran, Bangladesh and Sri Lanka.

The report also raised a red flag on India’s fiscal deficit target, saying the Indian government is unlikely to achieve its deficit target of 4.7 per cent of the GDP for 2011-12 as lower growth has brought down tax revenues and disinvestment in state-run companies has been put on hold.

Nevertheless, the study has given a positive outlook for India’s job market, saying, “India is enjoying gains in employment rates.”

FTA unlikely at EU Summit

With both sides still poles apart on issues of services, procurement policy, duty cuts on automobiles and wines and spirits, India and the European Union (EU) are working hard to put in a place a “political agreement” during the India-EU Summit slated for February 10 as the free trade agreement (FTA) is unlikely to happen.

“There is good news and bad news. The good news is that we are in intense phase of negotiations. The bad news is that we are behind schedule for the India-EU FTA which it is not going to happen before or during the India-EU Summit in New Delhi next month,” EU Delegation Ambassador to India Joao Cravinho told journalists here.

Mr. Cravinho said negotiations were going on this week and that the EU Director General of trade and chief negotiator would be in India next week to hold intense discussions on the various issues. The Trade Commissioner of EU would also be meeting Commerce and Industry Minister Anand Sharma next week in a bid to bring about a consensus on majority of the issues. “But I must caution that no FTA is happening before February 10. We are still away from such an agreement but efforts are being made to arrive at a political agreement on what is likely to form part of the chain of events leading to a FTA,” he said.

Refusing to go into the specifics of the disagreement on the FTA negotiations, he said both sides had reached finality on goods issue. However, there were persisting differences on the issue of services and procurement policy.

RBI releases third monetary policy review: CRR reduced to 50 basis points, Repo rate unchanged

Reserve Bank of India here on 24th January 2012 announced the statement on Third quarter Monetary Policy Review, making the markets surprised with unexpected cut in Cash Reserve Ratio(CRR) and it also estimates the GDP growth to be only 7% as against the previous expected 7.6%. 

Global growth prospects for 2012 have deteriorated in an environment of increasing concerns over the sovereign debt crisis in the euro area amidst limited monetary and fiscal policy space. Given the weak growth prospects in advanced economies and past monetary tightening undertaken by EDEs to contain inflation, growth in the EDEs has also been moderating. Accordingly, global growth during 2012 is expected to be lower than the International Monetary Fund’s September 2011 projection of 4.0 per cent.

Here are some important points in the Governor's Statement:

Inflation: Although non-oil commodity prices showed some correction in 2011, crude oil prices have remained firm. Supply limitations and continued ultra accommodative monetary policies in major advanced economies pose upside risks to commodity prices in 2012. Currency depreciation in EDEs witnessed in the second half of 2011 and the lagged pass-through to domestic prices could also add to inflationary pressures in EDEs. 

Cash Reserve Ratio: It has been decided to: reduce the cash reserve ratio (CRR) of scheduled banks by 50 basis points from 6.0 per cent to 5.5 per cent of their net demand and time liabilities (NDTL) effective the fortnight begining January 28, 2012. As a result of the reduction in the CRR, around `320 billion of primary liquidity will be injected into the banking system.

Repo Rate: The policy repo rate under the liquidity adjustment facility (LAF) has been retained at 8.5 per cent.

Reverse Repo Rate: The reverse repo rate under the LAF, determined with a spread of 100 basis points below the repo rate, stands at 7.5 per cent.

Marginal Standing Facility (MSF) Rate: The Marginal Standing Facility (MSF) rate, determined with a spread of 100 basis points above the repo rate, stands at 9.5 per cent.

Bank Rate: The Bank Rate has been retained at 6.0 per cent.

Indian Banking Industry : Emerging Trends

Fierce   competition,   innovative strategies   and   competitive   spirit   have satiated  banks   with   palpating activities.    Banks   are   adopting different strategies in an environment of  increased  competitive  pressure. Active strategies with focus on new fields  of  business  and  defensive strategy concentrating on cost cutting are   embraced   together.   Flawless service  delivery  is  the  target  with diffused   liabilities    and   multiple choices available to customers.

Technology   has   completely changed  the  nature  and  pace  of delivery of banking services world over.   The   speed   has   considerably improved alongwith the quality of the   services.   Various   delivery channels are available with banks for customers.   Broadly,  the  levels  of banking  services  offered  through internet can be categorized in to three types namely—Basic Level Service, Simple Transactional Websites and Fully Transactional Websites.

Indian banking was provided an opportunity by the liberalization in 1990s to extend its working para-meters beyond geographical borders. The  banking  reform  has  indeed helped   to   restore   semblance   of efficiency and stability. Our banking industry enjoys greater autonomy, operational flexibility and liberalized norms allowing it to be more com-petitive.

Technology   Driven   Indian Banking System

The     growing   universalisation and internationalisation of banking operations have altered the face of banks   from   one   of   mere   inter-mediator to one of provider of quick, efficient and consumer centric ser-vices. There has been massive use of technology  across  many  areas  of banking business in India, both from the asset and the liability side of a bank’s balance sheet.

Banks   pass   through   phases namely the inception phase, where the technology behind the application is in its infancy and a substantial amount of investment is required so as  to  make  the  application  widely available   commercially;  the  growth phase,   where   the   application   is increasingly available to the custo-mers and the technology behind the application is widely available; and the  maturity  phase,  wherein  the application is in widespread use and institutions not offering such applica-tions are likely to be at a competitive disadvantage.

The introduction of MICR based cheque  processing—a  first  for  the region, during the years 1986-88 was one of the earliest steps in Indian banking on the march of technology.

1.   Technological Changes in Indian Banking System

Core   Banking   Systems—The introduction   of   Core   Banking Systems   (CBS)  which  was  at  its nascent stages has become full blown and all banks are at varying stages   of implementation of Core Banking Systems in their branches.  There are 5 ingredients that form part of the Core Banking system viz. General Ledger   Customer,    Information System, Deposit System, Loan System and   Management   Information System.

INFINET—INFINET    (Indian Financial Network), is used by a large number of banks for funds and non-funds-based message transfers, and   is made available by the Institute     for Development and Research in Banking   Technology   (IDRBT), Hyderabad.  INFINET  is  perhaps among the few networks in the world which uses the latest in technology and   security   called   Public   Key Infrastructure—PKI, which is not only state-of-the-art and robust but also well within the legal requirements    of the Information Technology Act, 2000.

National   Electronic   Funds Transfer System—RBI introduced an electronic funds transfer system to facilitate an efficient, secure, econo-mical, reliable and expeditious system of funds transfer and clearing in the banking sector throughout India, and to relieve the stress on the existing paper-based   funds   transfer   and clearing  system  called  National Electronic  Funds  Transfer  System (NEFT System).

The parties to a funds transfer under  this  NEFT  System  are  the sending  bank,  the  sending  Service Centre,  the  NEFT  Clearing  Centre, the receiving Service Centre and the beneficiary branch. The EFT scheme enables transfer of funds within and across cities and between branches of a bank and across banks.

National    Electronic   Clearing Services—The objective of National Electronic Clearing Services (NECS) is to facilitate centralised processing for     repetitive   and   bulk   payment instructions.  Sponsor  banks  shall submit NECS data at a single centre viz. at Mumbai. While NECS (Credit) shall  facilitate  multiple  credits  to beneficiary accounts at destination branch against a single debit of the account of a User with the sponsor bank, the NECS (Debit) shall facilitate multiple debits to destination account holders against single credit to user account.

Centralized Funds Management System—The    Centralized   Funds Management  System  (CFMS),  is  a system   to   enable   operations   on current   accounts   maintained   at various offices of the Bank, through standard message formats in a secure manner. It is set up, operated and maintained by the Reserve Bank of India.

Mobile   Banking   Services—Mobile payments is defined as infor-mation exchange between a bank and its customers for financial transactions  through  the  use  of  mobile phones.  Mobile  payment  involves debit/credit to a customer’s account’s on the basis of funds transfer instruc-tion received over the mobile phones.

Only Indian Rupee-based dome-stic services shall be provided. Use of mobile  banking  services  for  cross border inward and outward transfers is  strictly  prohibited.  Only  banks which have implemented core bank-ing  solutions  would  be  permitted     to provide mobile banking services. Banks shall file Suspicious Trans-action  Report  (STR)  to  Financial Intelligence Unit–India (FIU-IND) for mobile banking transactions as in the case of normal banking transactions. To ensure inter-operability between banks,  and  between  their  mobile banking  service  providers,  banks shall adopt the message formats like ISO 8583, with suitable modification to  address  specific  needs.   Hence, banks offering mobile banking should notify the customers the timeframe and the circumstances in which any stop-payment instructions could be accepted.

 

2. Current Position of Technological Banking Services

Drift    Towards    Innovative Banking

1. Presence of Women on Boards

Banking in the West has tradi-tionally  been  a  male  bastion  and continues  to  be  so.  Study  titled “Women  on  Corporate  Boards  in India  2010”  ranked  the  companies listed in the Bombay Stock Exchange (BSE-100)  in  terms  of  the  gender diversity of their boards, with those with the highest percentage of women on their boards appearing at the top. The BSE-100 comprises 26 industry classifications   with   the   banking industry making up the largest group of companies.

Indian banks, with better gender equality on board than their western counterparts,  scraped  though  the economic slowdown unscathed.

Kalpana  Morparia  heads  the Indian   arm   of   global   financial leviathan J. P. Morgan Chase  &  Co; Meera Sanyal is the country executive for  Royal  Bank  of  Scotland  and; Manisha  Girotra  is  the  managing director of Union Bank of Switzer-land’s India operations.  K. J. Udeshi is the Chairman of Governing Council of BCSBI.

2. Mobile Branches

Domestic scheduled commercial banks (other than RRBs) were granted general permission by RBI, to opera-tionalise Mobile branches in Tier 3 to Tier 6 centres (with population upto 49,999 as per Census 2001) and in rural, semi urban and urban centres in  the  North  Eastern  States  and Sikkim, subject to reporting.

The  mobile  branch  should  be stationed in each village/location for a reasonable time on specified days and   specified   hours,   so   that   its services could be utilized properly by customers. The business transacted at the mobile branch shall be recorded in the books of the base branch/data centre.  The  bank  may  give  wide publicity about the mobile branch     in  the  village,   including   details   of ‘specified days and working hours’ at various locations so as to avoid any confusion to local customers; and any change in this regard should also be publicized.

3.     Social  Responsibility,  Sustain-able   Development   and   Non-Financial Reporting

Government infused into bank-ing  sector  the  ‘socialist’  constituent through   nationalization   of   major banks.

CSR  entails  the  integration  of social and environmental concerns by companies in their business opera-tions as also in interactions with their stakeholders. SD essentially refers to the process of maintenance of the quality of environmental and social systems in the pursuit of economic development.  NFR  is  basically  a system of reporting by organizations on their activities in this context, especially as regards the triple bottom line, that is, the environmental, social and economic accounting.

RBI  circular  (dated  December 20, 2007) on Role of Banks in Cor-porate Social Responsibility, Sustain-able Development and Non-Financial Reporting is appreciable. Stressing the need for Corporate Social Res-ponsibility (CSR), RBI pointed out that these initiatives by the banks are vital  for  sustainable  development. Banks have been directed to start; non-financial reporting will help to audit their initiatives towards the corporate social responsibility (CSR). Such a reporting will cover the work done by the banks towards the social, economic and environmental better-ment of society.

4. Universal Banking

Universal Banking refers to those services offered by banks beyond traditional banking service such as saving  accounts  and  loans  and includes  Pension  Funds  Manage-ment, undertaking equipment leas-ing,  hire  purchase  business  and factoring services, Primary Dealer-ship (PD) business, insurance busi-ness and mutual fund business.

The issue of universal banking came to limelight in 2000, when ICICI gave a presentation to RBI to discuss the time frame and possible options for transforming itself into an univer-sal bank.

Later  on  RBI  asked  financial institutions which are interested to convert them into a universal bank, to submit their plans for transition to a universal bank for consideration and further discussions.   FIs need to for-mulate a road map for the transition path and strategy for smooth con-version into an universal bank over a specified time frame. The plan should specifically provide for full com-pliance  with  prudential  norms  as applicable  to  banks  over  the  pro-posed period. Though the DFIs would continue to have a special role in the Indian  financial  System,  until  the debt market demonstrates substantial improvements in terms of liquidity and depth, any DFI, which wishes to do so, should have the option to transform into bank (which it can exercise),  provided  the  prudential norms as applicable to banks are fully satisfied. To this end, a DFI would need to prepare a transition path in order to fully comply with the regula-tory  requirement  of  a  bank.  The     DFI concerned may consult RBI for such transition arrangements. Reserve Bank will consider such requests on a case by case basis.

Thus, Indian financial structure is slowly evolving towards a conti-nuum  of  institutions  rather  than discrete specialization.

Conclusion

The  applicability  of  various existing laws and banking practices to e-banking is not tested and is still evolving, both in India and abroad. With rapid changes in technology and innovation in the field of e-banking, there is a need for constant review of different laws relating        to banking and commerce. A re-orientation of strategy is required in order to accommodate the changes and challenges of the present globa-lised scenario.

Technological      developments may become threat but still enable banks to access the global market through the electronic networks.  IT usage by banks would continue to exist  in  substantial  scales.  Indian Banking is trying to embrace latest technology upgrading its services. Clientele  are  reveling  sophisticated services  specific  needs,  preferences and conveniences by the banks.

Financial Literacy in India

The Essence of Money

We all acknowledge the fact that money is essential for sheer existence and survival yet tend to escape from learning  how  to  manage  money. Managing money means the ability to judiciously save and multiply the money earned, through an informed understanding of the financial pro-ducts and services available. It is also the question of avoiding risks and being protected from falling prey       to unscrupulous elements. In my opinion the single most critical factor in effective money management is to stay away from greed. Greed for making quick money often restricts the power to think and take appro-priate decisions. Greed and lust for easy money overpowers application of mind and the capacity to think sanely. We ignore the fact that money invested legally and ethically can hardly ever give returns which are disproportionate with respect to pre-vailing market conditions. Yet regu-larly we hear of people losing their hard earned money by succumbing to fraudulent schemes which promise attractive returns or trusting someone  who tempts them with windfall gains.

We must always remember that money does not grow on trees and investments/savings can fetch only normal returns which are in con-formity  with  market  norms.  Our indulgence in fancy schemes and faith in promoters whose credentials are not verified arises due to lack of adequate knowledge and the ability to think rationally. Money lost is difficult to retrieve; though checks and balances are there it is only the well informed who can pursue his case by approaching the respective authorities for redressal. We need to respect money for its value and its significance   for   sheer   survival. Financial literacy is therefore crucial for the well being of an individual from any section of society.

What is Financial Literacy ?

It is not logical to assume that all educated individuals are financially literate and the less educated are weak. In fact the converse could be true. What then is financial literacy? Simply expressed it is the ability       to  manage  one’s  personal  finance judiciously by making best/optimum use of one’s resources. There are different financial products and ser-vices available which cater to differ-ent needs and requirements. Under-standing these products and services and choosing according to the wants is what constitutes the right approach. These wants differ from individual to individual and even during the life span of a person the wants keep changing.  The  requirements  are linked to the risk taking capacity as the element of safety is crucial in an individual’s life.

Be it savings through bank/post office schemes, investing in stock markets or mutual funds, buying life cover and general insurance, raising loans or use of credit cards it is essen-tial to know the products thoroughly to make a well thought out decision. A prudent man generally relies on   his personal judgement rather than  dubious relationship managers/un-solicited help as trust and integrity    in financial matters are an absolute necessity. It is better to stay away from complex products and services if the knowledge levels are low as safeguarding of money is more impor-tant than taking unwanted risks. With the spread of technology and opening of the economy it has become even more important to select the appro-priate product after due diligence. Though technology has made ser-vices swifter and efficient it has     also  introduced  many  hazards.  A thorough understanding of the safe-guards in the technology process is all the more essential to avoid being a victim of fraudulent transactions.

To appreciate the significance and relevance of financial literacy for sound money management it may be worthwhile to capture a few illustra-tions.

(1) Taking the simple example of payment of interest on savings bank accounts not many still know that interest is now paid on the daily balance in the account. Rather than withdrawing money which may not be immediately required for a week at least it would be profitable if the same amount remains with the bank as it would continue to earn interest for the account holder. Better still the surplus funds in a savings account could be transferred to a fixed deposit account which would give higher interest.

(2) Those  seeking  loans  from banks often do not read the terms and conditions of the bank and blindly sign the documents thereby agreeing to the terms of the document. At times these papers are signed in blank  without  even  bothering  to understand the significance of the loan contract. Loan means having to fulfil many obligations by the bor-rower till it is cleared and pleading ignorance later does not help. In case of default the assets can be seized by the lender and the borrower has no scope to protect the asset without clearing the dues.

(3) Most loan documents require one or more guarantors to sign along with the borrower. This strengthens the  lender  in  case  the  borrower defaults. How many really know that the guarantor is liable to pay if the borrower does not repay the dues. There are many instances where the guarantors  regretted  signing  the documents and protested when they were asked to clear the loan. Such protests citing ignorance or lack of knowledge are of no use later.

(4) Most credit card holders do not realize that interest on roll over dues are charged abnormally high interest rates and interest gets com-pounded every month if the balance remains unpaid. Moreover service tax is also levied on the interest amount. Higher the interest amount higher the service tax becomes payable.

(5) Non-banking finance com-panies and corporates invite deposits from the public with offer of higher interest rates than most banks. It is quite logical for certain persons to be tempted to invest their funds in these schemes for the additional interest amount. What is of prime importance is to study thoroughly the back-ground and strength of the company before investing as the repayment of the deposit on maturity is not guaran-teed. There are so many examples where the companies have not retur-ned the money on maturity for various reasons. Some have even disappeared from the market after mobilizing substantial money. Ima-gine the poor person of meager means having to suffer the loss of money as he deposited in good faith but without full knowledge.

(6) RBI regularly releases reports of forged or counterfeit currency notes in circulation and the need to be cautious. How many of us really bother to understand the security features of currency notes to identify forged notes and take preventive action. The desired know how can stop the fraudulent use of illegal money and prevent undesirable con-sequences.  RBI’s  campaign  ‘Paisa Bolta Hai’ is an excellent audiovisual presentation on the measures to check the authenticity of a currency note.

(7) For the sake of credit and debit card holders there are regular warnings to avoid sharing their PIN and card numbers with any third person. Despite the constant educa-tion it is often seen that card users are asking total strangers at ATM centres and elsewhere how to operate their cards. The fact that they are inviting trouble is overlooked for the sake of momentary help. Little do we realize that knowledge can prevent many untoward happenings ?

(8) Insurance policies are pur-chased as tax savings schemes rather than the main objective of insuring life. The type of policy is also not properly understood as to the type of risk cover it is providing. Unfor-tunately the insurance agent is at times not fully educated himself or avoids suggesting the right policy for making higher commission payouts.

(9) Insurance policies carry a 15 days or in some cases one month free look period during which time the buyer can reconsider his decision to purchase the life cover. This enables the buyer to study carefully the features of the policy and compare it with his actual need. Very few really know about this facility which again demonstrates the need to be aware and vigilant.

(10) Retail investors enter the stock market hoping to make quick gains. Very few make their own independent studies but merely rely on hearsay. The results are obvious as a few lucky ones may make some money without adequate knowledge but the large majority suffer loses. There is also the ‘ASBA’ facility for subscribing to new issues without blocking one’s funds but very few take advantage of it. SEBI has tried to popularize this facility in many ways through  advertisement  campaigns and it is for the investor to gain from it. Once again the informed person only benefits.

(11) Investing in mutual funds has also become fashionable because of the coverage the sector gets. Yet it is a matter of debate as to how many can differentiate between equity or debt funds or even hybrid varieties. The investment is not linked to the risk taking capacity of the investor and his financial priorities. Often the investor is not aware whether his holdings in the fund belong to the growth or dividend option.

The above examples relate to very basic transactions but convey the significance of possessing sound knowledge  for  prudent  decision making. Absence of financial literacy can truly damage substantially the interests of the persons concerned. It is difficult to escape for any age group as money is needed by all.

The   Spread   of   Financial Literacy

It is better to start early with the process of financial education as discipline in money matters is an important characteristic of an indivi-dual. Children should be taught the benefits of saving and introducing the age old concepts of having a piggy bank can be a welcome start. Schools need to inculcate these habits in students  and  gradually  introduce them to the basics of personal finance. A beginning has already been made by introducing subjects on basic finance in the school curriculum at certain centres. Reserve Bank of India is promoting this early education of children by adopting a friendly and entertaining way through the medium of comics. They are also encouraging the young to participate in contests, the winners of which are awarded scholarships.  It  is  the  vulnerable sections of society like women, senior citizens, the rural and urban poor who need to be adequately educated and equipped. The Financial Literacy programme of RBI is tackling all these issues through different means. Their website is a store house of knowledge provided there is an urge to learn. The individual has to be proactive and be eager to grasp the necessary knowledge to safeguard himself and thereby his money. RBI is making extra efforts to be as trans-parent as possible in the larger interest of the common citizen by reaching out to them through their out reach programmes. These pro-grammes which were held during the 75th year of RBI in 2010 in far corners of the country were primarily to educate the masses about the activi-ties of RBI and how to utilize the available banking services for their betterment.

Most banks also have their finan-cial literacy departments and credit counseling centres where personal problems are addressed. How much of these centres are successes is deba-table because a very small percentage of people know about these facilities and even if they know there is an inherent hesitation to seek their help. The websites of banks and financial institutions also have all the details about their products and services. In case of doubts it is advisable to refer to these portals to avoid making any wrong or improper decision. The concern is that incomplete or half baked knowledge is not used to take decisions which are repented later.

BCSBI  or  Banking  Codes  and Standards Board of India has been set up by RBI as an apex body to improve the working of banks and introduce systemic changes wherever necessary for better treatment of customers. While their primary focus remains on customer service they are also par-ticipating in disseminating informa-tion on different aspects of banking. For an effective literacy campaign it is important that information asym-metry between service provider and customer is reduced. In this connec-tion banks have unilaterally under-taken to comply with a Code of Commitment to Customers detailing the nature of services provided by banks, the normal time taken for rendering  these  services  and  the various obligations of banks who have signed these codes. Only when there is awareness can the customers use the code to their benefit. It is for the individual to take advantage of the provisions provided there is will-ingness to learn. BCSBI also publishes a quarterly newsletter which is both informative and educative.

The importance of promoting financial literacy and the enormity of the task is being gradually under-stood. This has made many organi-zations enter this field to make their presence felt. Innovative ways have been adopted to keep the literacy efforts simple and user friendly for maximum benefit. Websites, print media and audio visual communi-cations relating to financial education are easily accessible for the average individual to improve his under-standing of the financial market, its products and services.

National dailies, banks, financial institutions, private organisations are individually contributing through easy to understand pamphlets, comic strips, newsletters etc. to reach the consumer  covering   fundamental issues. Seminars, conferences, inter-active sessions are often arranged to address issues of common concern and dissemination of information.

Spreading of information and awareness is critical for an emerging economy like India. If the vast popu-lation of deprived people is brought into the mainstream it would be of immense benefit both as a social necessity as well as an economic push. The call for financial inclusion in the country has therefore become an immediate priority and is engag-ing the attention of policy makers for effective execution. It would reap dividends only when the targeted people are financial literate. Only then would they be able to make the most appropriate choice of the pro-ducts and services which would improve their position. The vast majority of our people are extremely vulnerable as they depend upon informal sources of finance for meet-ing their needs. Only by empowering them with the adequate knowledge can we hope to improve their lot and that of the economy as a whole. The penetration of banking and insurance services is extremely poor in India and if the coverage is extended by simultaneous spreading of financial literacy it would be a huge progress for  overall  growth.  The  formal channels of money transmission has to be introduced for all round benefit as for far too long the poor, gullible people have suffered at the hands of the money lender and his brethren.

The  international  body  Orga-nisation for Economic Development OECD is putting its weight behind RBI in promoting financial literacy in India. There is no running away from this hard fact for which the financial service  providers  are  also  being trained  to  encourage  the  dissemi-nation of information in as compre-hensive a way as possible. However it is the individual as the consumer who needs to grasp and absorb the knowledge for his betterment and safety.

Money creation through the legi-timate way is hard and painstaking but can be lost in no time if there is improper financial planning. Finan-cial awareness is a critical component in  the  process  of  protecting  and enlarging the corpus of funds that an individual may have.

Economic Survey to have special chapter on financing of climate change

The Finance Ministry will include a special chapter on financing of climate change in the Economic Survey, the Chief Economic Advisor, Mr Kaushik Basu, has said.

“This year we have decided to devote a special chapter on the topic of financing of climate change in the Economic Survey,” Mr Basu said while addressing a UNDP event.

Speaking at the event, the Economic Affairs Secretary, Mr R. Gopalan, said that the climate change issue is posing a challenge for the world.

“The challenges are both environmental and developmental.

Addressing climate change is a challenge for all humanity and it is in our interest that the world community address the issue effectively,” Mr Gopalan said.

He said there is a need to change the way we use natural resources and device new technology to meet the challenges.

As per the 2010-11 Economic Survey, India’s total carbon-di-oxide emissions were about 4 per cent of the global emissions. The survey also showed that it cost India 2.84 per cent of its GDP to adapt to climate change.

Studies show that even with 8-9 per cent GDP growth every year for the next decade, India’s per-capita emissions will be well below developed countries average.

Bankrolling the banks

The Reserve Bank of India's (RBI) recently released draft guidelines on the proposed implementation of international norms of capital adequacy (Basel–III) would require Indian banks to mobilise huge sums of capital during the next five years. Under the existing Basel-II norms, the Indian banking industry has to maintain total capital — drawn from a combination of equity and preference shares plus long-term debt, both accorded lower priority to monies belonging to depositors — amounting to 9 per cent of their assets calibrated suitably for riskiness (‘risk-weighted assets' or RWA). While the overall ratio has been retained under the proposed new norms, a minor reshuffle has been attempted between equity/preference stock holders and long-term bond holders in the event of a bank failure, with the former having to contribute an additional one percentage point capital to their existing 6 per cent of the total 9 per cent. Further, equity/preference share holders have to come up with an additional 2.5 percentage points in capital as a buffer for any unforeseen contingencies. That takes the aggregate capital adequacy ratio (CAR) to 11.5 per cent, of which common equity alone would make up 8 per cent. The emphasis is clearly not just on meeting a broadly defined overall CAR of 8 per cent (as it was two decades ago), but also on improving the transparency and quality of the capital base. The implementation period for all these is from January 1, 2013 to March 31, 2017.

The rationale behind fashioning a tighter capital (especially core equity) regulatory regime for banks stems largely from the banking crises that followed the global recession of 2008 and also the ongoing European sovereign debt troubles. These have created renewed concerns over the banking sector's ability to withstand financial shocks and minimise risks of spill-over to the real economy. But implementation will be a huge challenge, with the estimates of fresh capital needed to be raised by all Indian banks ranging anywhere from Rs 1.4 lakh to Rs 3 lakh crore. Given the dominance of public sector banks, it would necessitate large government infusion of funds. Where this money is going to come from, if the Centre would not even be prepared to dilute its stake below 51 per cent, is a huge question mark. This issue came to the fore not too long back, when Moody's downgraded the State Bank of India's credit rating, after its Tier-1 CAR fell below the Government's own 8 per cent prescription.

Related to this is the more immediate problem of rising non-performing assets (NPA) on account of loans to a host of troubled sectors from telecom and airlines to power. As these mount – under pressure from high interest rates and the general economic slowdown – banks would have to find resources to maintain even existing capital adequacy levels. The RBI, under the circumstances, cannot be totally oblivious to concerns over the proposed implementation schedule for Basel-III, which is seen to be rather frontloaded.

BANK EXAMS GENERAL AWARENESS PRACTICE QUESTIONS

1.Which country's lower house of Parliament is called Wolesi Jirga?
1) Russia
2) Afghanistan
3) Japan
4) Pakistan
5) Bangladesh

2.Which of the following statements is/are correct?
1)The UNESCO-Madanjeet Si-ngh Prize for the Promotion of Tolerance and Non-Violence is a prize awarded every two years by UNESCO.
2)This award has been instituted in memory of Mahatma Gandhi.
3)This prize of US $ 1, 00,000 was made possible by the donation of the Indian diplo-mat Madanjeet Singh who is also the Goodwill Ambas-sador of UNESCO.
4) The 2011 awardees are Afgh-anistan's women's rights cam-paigner Anarkali Honaryar and Palestinian peace activist Khaled Abu Awwad.
5) All the above statements are correct.

3.Who among the following was chosen for the UNESCO-Madanjeet Singh Prize for the Promotion of Tolerance and Non-Violence in 2002, but was allowed to accept the prize only in November 2011?
1) Taslima Nasreen (Bangladesh)
2) Aung San Suu Kyi (Myanmar)
3) Francois Houtart (Belgium)
4) Abdul Sattar Edhi (Pakistan)
5) None of these

4.Which of the following days is observed as the International Day for Tolerance?
1) October 2
2) November 16
3) October 24
4) October 16
5) November 14

5.Scientists have found the best evidence yet for water just beneath the surface of Europa. Europa is the icy moon of which of the following planets?
1) Mars
2) Saturn
3) Jupiter
4) Venus
5) Uranus

6.Which of the following countries is not a member of the Nuclear Suppliers Group (NSG)?
1) USA
2) Australia
3) Canada
4) India
5) France

7.Metro Cash& Carry is planning to invest Rs. 2400 crore in India on new stores in the next four years. To which country does this retailing giant belong?
1) Germany
2) Indonesia
3) Singapore
4) Malaysia
5) USA

8.The renovated Advanced Landing Ground (ALG) of Vijay-nagar, a completely air-mainta-ined and strategically located human settlement, was inaugur-ated recently. In which state is this Vijaynagar airfield located?
1) Assam
2) Nagaland
3) Karnataka
4) Arunachal Pradesh
5) None

9.A delegation from the Unites States Nuclear Regulatory Com-mission (USNRC) visited the nuclear facilities at Kalpakkam. In which state is Kalpakkam situated?
1) Karnataka
2) Kerala
3) Tamil Nadu
4) Maharashtra
5) None of these

10.The United Nations General Ass-embly has re-elected who among the following as a member of the International Law Commission (ILC) for a five- year term?
1) Mota Singh
2) Narinder Singh
3) Swaraj Paul
4) P.Venkat Ram Reddy
5) None

11.What is the disinvestment target for the current financial year i.e. 2011-12?
1) Rs.25, 000 crore
2) Rs.30, 000 crore
3) Rs.40, 000crore
4) Rs.50, 000 crore
5) None

12.Gloria Macapagal Arroyo was arrested for electoral fraud recently. She was the President of which of the following countries from 2001 to 2010?
1) Singapore
2) Philippines
3) Venezuela
4) Honduras
5) Vietnam

13.Sarath Fonseka was sentenced to spend three more years in prison in November 2011. He is the former army chief of which of the following countries?
1) Nepal
2) Mauritius
3) Sri Lanka
4) Pakistan
5) Myanmar

14.Which of the following badmi-nton tournaments was won by Saina Nehwal in the year 2011?
1) Singapore Super Series
2) Indonesia Super Series
3) Hong Kong Super Series
4) All England Badminton Championship
5) None

15.Guru Saidutt excelled in which of the following sports?
1) Table Tennis
2) Badminton
3) Lawn Tennis
4) Volleyball
5) Basketball

16.Which of the following trains covers the largest rail route in the country 4,286 km?
1) Vivek Express (Dibrugarh to Kanya Kumari)
2) Himsagar Express (Jammu Tawi to Kanya Kumari)
3) Dibrugarh-Chennai Express
4) Howrah-Amritsar Express
5) None of these

17.Sukh Ram was sentenced to five years' imprisonment by a special CBI Court in November 2011. He was a Minister of State for Communications in which of the following governments?
1) A.B.Vajpayee
2) P.V.Narasimha Rao
3) Rajiv Gandhi
4) Indira Gandhi
5) None

18.Eurasian Union is an economic body designed to reintegrate the former Soviet economies. Which of the following countries is not a member of this new group?
1) Russia
2) Kazakhstan
3) Belarus
4) Georgia
5) All the above mentioned countries are members

19.Basil D' Oliveira, the South Africa-born English player passed away recently. He was a renowned player in which of the following sports?
1) Football
2) Cricket
3) Rugby
4) Basketball
5) Boxing

20.Which Indian leader was honored by Singapore as a "Friend to our Shores" and a "Visionary" in November 2011?
1) Jawaharlal Nehru
2) Mahatma Gandhi
3) Sardar Vallabhbai Patel
4) Indira Gandhi
5) A.B.Vajpayee

21.Which of the following groups/ organizations has funded a sports centre in Ramallah, Palestine?
1) BRICS
2) BASIC
3) IBSA
4) SAARC
5) APEC

22.Which was the first non-Arab state to recognize the Palestine Liberation Organization (PLO) in 1975?
1) India
2) Israel
3) China
4) USA
5) France

23.The Bar Council of India (BCI) was formed in 1961 as a regulatory body for the legal profession governed by the Indian Advocates Act. It is celebrating its golden jubilee. Who is its present Chairman?
1) Satish Abarao Deshmukh
2) Ashok K. Parija
3) S.Prabakaran
4) T.S.Ajith
5) None of theses

24.Tipaimukh Dam is a proposed dam on the river Barak in which state of India? (This project has led to a controversy between India and Bangladesh)
1) Assam
2) Nagaland
3) Manipur
4) Tripura
5) Arunachal Pradesh

25.Which team was crowned overall champions at the 65th Senior National Aquatic Championships in Ranchi in November 2011?
1) Karnataka
2) Maharashtra
3) Railways
4) Kerala
5) Gujarat

26.Which woman swimmer won 5 gold medals in the 65th Senior National Aquatic Championships held in Ranchi in November 2011?
1) Pooja Alva
2) Richa Mishra
3) Bhoomi Motwani
4) Talasha Prabhu
5) Surabhi Tipre

27.Who won the Men's singles title at the Hong Kong Open badminton championships in November 2011?
1) Lin Dan
2) Chen Jin
3)Cai Yun
4)Fu Haifeng
5)None

28.Which of the following teams won the Presidents Cup golf tournament in November 2011?
1) Internationals
2) USA
3) Europe
4) Australia
5) None

29.Which of the following teams has won both the men's and wo-men's Kabaddi world cup that was held in Ludhiana in Nove-mber 2011?
1) Canada
2) Pakistan
3) USA
4) India
5) Australia

30.Who has been selected for the Indira Gandhi Prize for Peace, Disarmament and Development 2011, an award instituted by the Indira Gandhi Memorial Trust?
1) Sheikh Hasina
2) Ela Bhatt
3) Angela Merkel
4) Hillary Clinton
5) Medha Patkar

31.Which city will host the 2018 Commonwealth Games?
1) Hambantota (Sri Lanka)
2) Glasgow (Scotland)
3) Gold Coast (Australia)
4) Wellington (New Zealand)
5) London (United Kingdom)

32.Mohammad Zillur Rahman is the President of which of the following countries?
1) Pakistan
2) Bangladesh
3) Iran
4) Afghanistan
5) Syria

33.Which of the following institut-ions decides the Bank rate?
1) SEBI
2) SBI
 3) IRDA
4) NABARD
5) RBI

34.Which scientist was conferred with the Ernesto Illy Trieste Science Prize for 2011 in November 2011? (This prize was instituted by the Academy of Sciences of the Developing World. It carries a cash compo-nent of 1,00,000 dollars. It seeks to honor distinguished scientists from developing countries.)
1) Tessy Thomas
2) V.K.Saraswat
3) C.N.R Rao
4) Venkatraman Ramakrishnan
5) None of these

35.National Income Accounting, Conduct of Annual Survey of In-dustries, Economic Census and its follow up surveys, compil-ation of index of industrial prod-uction, etc. are some of the activ-ities of which of the following institutions/organizations?
1) Reserve Bank of India
2) Planning Commission
3) Central Statistics Office
4)National Development Council
5)Unique Identification Authority of India

36.The distribution of Teesta river water is a bone of contention between India and which of the following countries?
1) Pakistan
2) Nepal
3)China
4)Bangladesh
5)Bhutan

37.Which of the following organiz-ations/ agencies was set up to boost overall rural development in India?
1) RBI
2) SIDBI
3) NABARD
4) SEBI
5) None of these

38.BR Act controls banking activities in India. What does the letter 'R' denote?
1) Reformation
2) Regulation
3) Reporting
4) Ranking
5) None of these

39.Who is the ex-officio Chairman of the Rajya Sabha?
1) Meira Kumar
2) Mohammad Hamid Ansari
3) Karia Munda
4) K.Rahman Khan
5) Manmohan Singh

ANSWERS:

1. (2) 2. (5) 3. (2) 4. (2) 5. (3) 6. (4) 7. (1) 8. (4) 9. (3) 10. (2)
11. (3) 12. (2) 13. (3) 14. (5) 15. (2) 16. (1) 17. (2) 18. (4) 19. (2) 20. (1)
21. (3) 22. (1) 23. (2) 24. (3) 25. (1) 26. (2) 27. (1) 28. (2) 29. (4) 30. (2)
31. (3) 32. (2) 33. (5) 34. (3) 35. (3) 36. (4) 37. (3) 38. (2) 39. (2)

RBI releases Mid Quarter Monetary Policy Review

Monetary Measures

On the basis of the current macroeconomic assessment, it has been decided to:

• keep the cash reserve ratio (CRR) unchanged at 6 per cent; and
• keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.5 per cent.

Consequently, the reverse repo rate under the LAF will remain unchanged at 7.5 per cent and the marginal standing facility (MSF) rate at 9.5 per cent.

Introduction

Since the Reserve Bank’s Second Quarter Review (SQR) of October 25, 2011, the global economic outlook has worsened significantly. The recent European Union (EU) summit agreement did not assuage negative market sentiments, thereby increasing the likelihood of persistent financial turbulence as well as a recession in Europe. Both factors pose threats to emerging market economies (EMEs), including India. Significantly, despite these developments, crude oil prices remain elevated.

On the domestic front, growth is clearly decelerating. This reflects the combined impact of several factors: the uncertain global environment, the cumulative impact of past monetary policy tightening and domestic policy uncertainties.

Both inflation and inflation expectations are currently above the comfort level of the Reserve Bank. However, reassuringly, inflationary pressures are expected to abate in the coming months despite high crude oil prices and rupee depreciation. The growth deceleration is contributing to a decline in inflation momentum, which is also being helped by softening food inflation.

Global Economy

The global economic situation continues to be fragile with no credible solution as yet to the immediate  euro area sovereign debt problem. At the EU summit on December 8-9, the European leaders agreed on a new fiscal compact, involving stronger coordination of economic policies to strengthen fiscal discipline. While the agreement is necessary for medium and long-term sustainability of the euro area, its ability to resolve short-term funding pressures was questioned by markets.  Q3 euro area growth, at 0.8 per cent, was anaemic and 2012 growth is now expected to be weaker than earlier projected.  Reflecting these projections, the European Central Bank (ECB) cut its policy rate twice in the last two months, and also implemented some non-standard measures. By contrast, growth in the US in Q3 of 2011 was better than in Q2, although still substantially below trend.

Growth in EMEs is also moderating on account of sluggish growth in advanced economies and the impact of monetary tightening to contain inflation. In view of the slowing down of their economies, Brazil, Indonesia, Israel and Thailand cut their policy rates, while China cut its reserve requirements. EME currencies have also come under varying degrees of downward pressure as a result of global risk aversion and financial stress emanating from the euro area.

Domestic economy

Growth

GDP growth moderated to 6.9 per cent in Q2 of 2011-12 from 7.7 per cent in Q1 and 8.8 per cent in the corresponding quarter a year ago. The deceleration in economic activity in Q2 was mainly on account of a sharp moderation in industrial growth. On the expenditure side, investment showed a significant  slowdown. Overall, during the first half (April-September) of 2011-12, GDP growth slowed down to 7.3 per cent from 8.6 per cent last year.

Industrial performance has further deteriorated as reflected in the decline of the index of industrial production (IIP) by 5.1 per cent, y-o-y, in October 2011. This was mainly due to contraction in manufacturing and mining activities. The contraction was particularly sharp in capital goods with a y-o-y decline of 25.5 per cent, reinforcing the investment decline story emerging from the GDP numbers.

Other indicators also suggest a similar tendency, though by no means as dramatic as the IIP. The HSBC purchasing managers' index (PMI) for manufacturing suggested further moderation in growth in November 2011. However, PMI-services index recovered in November from contractionary levels in the preceding two months. Corporate margins in Q2 of 2011-12 moderated significantly as compared with their levels in Q1. The decline in margins was largely on account of higher input and interest costs. Pricing power is evidently declining.

On the food front, the progress of sowing under major rabi crops so far has been satisfactory, with area sown under foodgrains and pulses so far being broadly comparable with that of last year.

Inflation

On a y-o-y basis, headline WPI inflation moderated to 9.1 per cent in November from 9.7 per cent in October, driven largely by decline in  primary food articles inflation. Fuel group inflation went up marginally. Notably, non-food manufactured products inflation remains elevated, actually increasing to 7.9 per cent in November from 7.6 per cent in October, reflecting rising input costs. The new combined (rural and urban) consumer price index (base: 2010=100) rose further to 114.2 in October from 113.1 in September. Inflation in terms of other consumer price indices was in the range of 9.4 to 9.7 per cent in October 2011. Reassuringly, headline momentum indicators, such as the seasonally adjusted month-on-month and 3-month moving average rolling quarterly inflation rate, show continuing signs of moderation.

External sector

Merchandise exports growth decelerated sharply to an average of 13.6 per cent y-o-y in October-November from an average of 40.6 per cent in the first half of 2011-12.  However, as imports moderated less than exports, the trade deficit widened, putting pressure on the current account. This, combined with rebalancing of global portfolios by foreign institutional investors and the tendency of exporters to defer repatriating their export earnings, has led to significant pressure on the rupee.

As on December 15, 2011, the rupee had depreciated by about 17 per cent against the US dollar over its level on August 5, 2011, the day on which the US debt downgrade happened. In the face of this, several measures were taken to attract inflows. Limits on investment in government and corporate debt instruments by foreign investors were increased. The ceilings on interest rates payable on non‐resident deposits were raised. The all‐in‐cost ceiling for external commercial borrowings was increased. Further, a series of administrative measures that discourage speculative behaviour were also initiated. The Reserve Bank is closely monitoring the developments in the external sector and it will respond to the evolving situation as appropriate.

Fiscal  Situation

The central government’s key deficit indicators worsened during 2011-12 (April-October), primarily on account of a decline in revenue receipts and increase in expenditure, particularly subsidies. The fiscal deficit at 74.4 per cent of the budgeted estimate in the first seven months of 2011-12 was significantly higher than 42.6 per cent in the corresponding period last year (about 61.2 per cent if adjusted for more than budgeted spectrum proceeds received last year). The likely slippage in this year’s fiscal deficit has inflationary implications. 

Money, Credit and Liquidity Conditions

The y-o-y money supply (M3) growth moderated from 17.2 per cent at the beginning of the financial year to 16.3 per cent on December 2, 2011, although still higher than the projected trajectory of 15.5 per cent for the year. Y-o-y non-food credit growth at 17.5 per cent on December 02, 2011, however, was below the indicative projection of 18 per cent.

Consistent with the stance of monetary policy, liquidity conditions have remained in deficit during this fiscal year. However, the deficit increased significantly beginning the second week of November 2011. The average borrowings under the daily LAF increased to around ` 89,000 crore during November-December (up to December 15, 2011) from around  `49,000 crore during April-October 2011.  The Reserve Bank conducted open market operations (OMOs) on three occasions in November-December 2011 for an amount aggregating about ` 24,000 crore to ease liquidity conditions.

There are currently no significant signs of stress in the money market. The overnight call money rate is stable around the policy repo rate and liquidity facilities such as marginal standing facility (MSF) remain unutilised.  However, in view of the fact  that borrowings from the LAF are persistently above the Reserve Bank's comfort zone, further OMOs will be conducted as and when seen to be appropriate. 

Outlook

Global growth for 2011 and 2012 is now expected to be lower than earlier anticipated. Increased strains in financial markets on the back of growing concerns over euro area sovereign debt, limited monetary and fiscal policy manoeuvrability, high unemployment rates, weak housing markets and elevated oil prices are all contributory factors. These factors have also contributed to moderating growth in the EMEs. As a consequence of all-round slower growth, inflation has also started declining, both in advanced countries and EMEs. 

On the domestic front, agricultural prospects look promising on the back of expected record kharif output and satisfactory progress on rabi sowing. However, industrial activity is moderating, driven by deceleration in investment, which is a matter of serious concern. Overall, the growth momentum in the economy is clearly moderating. Further, considering the global and domestic macroeconomic situation, the downside risks to the Reserve Bank’s growth projection, as set out in the SQR, have increased significantly. 

Between the First Quarter Review (FQR) and the SQR, while non-oil commodity prices had declined significantly, the rupee too had depreciated sharply. Consequently, the headline inflation projection at 7 per cent for March 2012, as set out in the FQR, was retained in the SQR. With moderation in food inflation in November 2011 and expected moderation in aggregate demand and hence in non-food manufactured products inflation, the inflation projection for March 2012 is retained at 7 per cent.

The Reserve Bank will make a formal numerical assessment of its growth and inflation projections for 2011-12 in the third quarter review of January 2012.

Guidance

While inflation remains on its projected trajectory, downside risks to growth have clearly increased. The guidance given in the SQR was that, based on the projected inflation trajectory, further rate hikes might not be warranted. In view of the moderating growth momentum and higher downside risks to growth, this guidance is being reiterated. From this point on, monetary policy actions are likely to reverse the cycle, responding to the risks to growth.

However, it must be emphasised that inflation risks remain high and inflation could quickly recur as a result of both supply and demand forces. Also, the rupee remains under stress. The timing and magnitude of further actions will depend on a continuing assessment of how these factors shape up in the months ahead.

BANK EXAMS GENERAL AWARENESS MCQs

1. Sushil Kumar, the winner of 'Kaun Banega Crorepati', was appointed as the brand ambass-ador for which of the following programmes?
1) JNNURM
2) IAY
3) Bharat Nirman
4) MGNREGA
5) None of these

2. Mario Monti became the new Prime Minister of which of the following countries in November 2011? (He succeeded Silvio Berlusconi)
1) France
2) Greece
3) Italy
4) Russia
5) Poland

3. Which of the following stateme-nts about the International Child-ren's Film Festival is/are correct?
1) The 17th International Childr-en's Film Festival was titled 'The Golden Elephant'.
2) The film festival was organiz-ed by the Children's Film Soc-iety of India (CFSI). Nandita Das is the chairperson of CFSI.
3) In the Indian competition section, 'Chillar Party' won the Best Feature Film.
4) Alafzar(Meadow), an Iranian film, was adjudged the Best Feature Film in the Competit-ion International section.
5) All the above are correct.

4. Which of the following countries was suspended from the Arab League in November 2011?
1) Qatar
2) Syria
3) Jordan
4) Libya
5) Saudi Arabia

5. Which is the first Indian comp-any to be listed in NASDAQ?
1) TCS
2) Reliance
3) Infosys
4) Wipro
5) None of these

6. With which game is Vijay Hazare Trophy associated?
1) Hockey
2) Football
3) Tennis
4) Table Tennis
5) Cricket

7. Which of the following countries is not a member of ASEAN?
1) Pakistan
2) Indonesia
3) Singapore
4) Malaysia
5) Thailand

8. Renowned cricket writer Peter Roebuck committed suicide recently. He was the captain of which of the following English county teams in the 1980s?
1) Oxford shire
2) Somerset
3) Kent
4) Essex
5) Sussex

9. Which city hosted the 17th International Children's Film Festival in November 2011?
1) Mumbai
2) Bangalore
3) Hyderabad
4) New Delhi
5) None of these

10. Who was named the Male World Athlete of the Year for 2011 by athletics' governing body, the International Association of Athletics Federation (IAAF)?
1) Yohan Blake (Jamaica)
2) Kirani James (Grenada)
3) Usain Bolt (Jamaica)
4) LaShawn Merritt (USA)
5) None of these

11. Sally Pearson, the world 100m hurdles champion, was named the Female World Athlete of the year for 2011 by the IAAF. To which country does she belong?
1) Australia
2) New Zealand
3) U.K.
4) U.S.A.
5) Denmark

12. Which of the following awards/ prizes is given for science?
1) Templeton Prize
2) Jnanpith Award
3) Phalke Ratna
4) Shanti Swarup Bhatnagar Award
5) None of these

13. Who is the author of the book 'The Exile', which is based on the life of Duleep Singh, the last Maharaja of Lahore?
1) Chetan Bhagat
2) Navtej Sarna
3) Mulk Raj Anand
4) Khushwant Singh
5) None of these

14. Which of the following is not a plantation crop?
1) Rubber
2) Arecanut
3) Cocoa
4) Potato
5) Coconut

15. The term Bull's eye is associated with which of the following sports?
1) Badminton
2) Boxing.
3) Shooting
4) Cricket
5) Hockey

16. Which of the following is/are considered as allied agricultural activity?
1) Poultry
2) Fisheries
3) Dairy
4) Sheep rearing
5) All the above

17. Which of the following program-mes was launched by the govern-ment to develop rural infrastruct-ure in India?
1) SHGs
2) Bharat Nirman
3) JNNURM
4) IAY
5) None of these

18. Which of the following is not the name of a foreign bank?
1) BNP Paribas
2) Deutsche Bank
3) Barclays
4) Cathay Pacific
5) RBS

19. Which of the following schemes has been successful in attracting children to come to school and get educated?
1) MGNREGA
2) Food for Work
3) Mid Day Meal
4) NRLM
5) None of these

20. Guru Tegh Bahadur Gold Cup tournament is associated with which of the following sports?
1) Hockey
2) Badminton
3) Cricket
4) Soccer
5) None of these

21. Where is the National Commo- dity and Derivatives Exchange Limited (NCDEX) located?
1) Hyderabad
2) Mumbai
3) Kolkata
4) Bangalore
5) New Delhi

22. Which former Chief Election Commissioner is the author of the book 'The Miracle of Demo-cracy: India's Amazing Journey'?
1) T.N.Seshan
2) M.S.Gill
3) B.B.Tandon
4) T.S.Krishnamurthy
5) Navin Chawla

23. What is the full form of 'POS'?
1) Permission of Sale
2) Point of Sale
3) Point of Support
4) Potential of Service
5) None

24. Which of the following is not a banking term?
1) Overdraft
2) CBS
3) Equator
4) Account payee
5) SME Finance

25. The Doing Business Report (DBR) is released every year by which of the following instituti-ons?
1) IMF
2) World Bank
3) WTO
4) ADB
5) UNCTAD

26. Which of the following banking terms is used to describe bad loans?
1) CBS
2) NPA
3) RTGS
4) Prime Loans
5) Prime Assets

27. Which country's currency is called Yen?
1) China
2) North Korea
3) South Korea
4) Japan
5) Thailand

28. Which of the following approves the draft of the Five Year Plans?
1) Planning Commission
2) National Innovation Council
3) National Development Council
4) Finance Commission
5) None of these

29. Which of the following is an extra-constitutional and non-statutory body?
1) Election Commission
2) Finance Commission
3) Planning Commission
4) Union Public Service Commission
5) None of these

30. Which of the following gives Crystal Award?
1) WTO
2) WEF
3) APEC
4) IBRD
5) ADB

31. Which of the following decides the distribution of tax incomes between the central and state governments?
1) Law Commission
2) Pay Commission
3) Planning Commission
4) Finance Commission
5) Administrative Reforms Commission

32. Who is the author of the book 'Termites in the Trading System'?
1) Jagdish Bhagwathi
2) Amartya Sen
3) M.S.Swaminathan
4) Paul Krugman
5) None of these

33. Which of the following is not a football club?
1) Chelsea
2) Arsenal
3) Manchester United
4) Monte Carlo
5) Liverpool

34. Putrajaya is the administrative capital of which of the following countries?
1) Malaysia
2) Indonesia
3) Sri Lanka
4) Nepal
5) None of these

35. Which of the following South American countries is a member of the Organization of Petroleum Exporting Countries (OPEC)?
1) Peru
2) Ecuador
3) Chile
4) Brazil
5) Argentina

ANSWERS:
1) 4 2) 3 3) 5 4) 2 5) 3
6) 5 7) 1 8) 2 9) 3 10) 3
11) 1 12) 4 13) 2 14) 4 15) 3
16) 5 17) 2 18) 4 19) 3 20) 1
21) 2 22) 4 23) 2 24) 3 25) 2
26) 2 27) 4 28) 3 29) 3 30) 2
31) 4 32) 1 33) 4 34) 1 35) 2