BANKING AWARENESS PRACTICE MCQs

1. Indian Commercial Banks are categorized into: 
a) Public sector Banks 
b)Foreign Banks 
c) Private Sector Banks 
d) All of the above 
e) None 

2. Regional Rural Banks have been set up with the basic objectives of:
a) Providing credit to semi - urban & urban population 
b) Providing deposits facilities to farmers 
c) Providing credit & deposit facilities to rural areas 
d) providing credit, deposit and other banking facilities to people in rural areas 
e) None

3. _____ is raised in capital markets 
a) Funds through long term securities
b) Long term loans through Govt. securities 
c) medium term loans 
d) Short - term instruments
e) None

4. Interest on Government secu-rities on fixed basis is known as: 
a) Bank rate 
b) Coupon 
c) Prime Lending Rate 
d) Bench mark PLR 
e) None

5. __ was not nationalized in 1969: 
a) Punjab National Bank
b) Oriental Bank of commerce 
c) Bank of Baroda 
d) Union Bank of India 
e) None

6. In the first round 14 major banks with a liability base of ____ were nationalized: 
a) 10 crore or more 
b) 20 crore or more 
c) 50 crore or more 
d) 100 crore or more 
e) None

7. _____ do not attract TDS: 
a) Fixed deposits 
b) Reinvestment depositsc) NRO SB 
d) NRO FDR 
e) Recurring deposits 

8. SLR is maintained as a percentage of:
a) Time liabilities 
b) Demand liabilities
c) Time and Demand liabilities 
d) Gross time and demand liabilities 
e) Net demand and time Liabilities 

9. The maximum Statutory Liquidity Ratio to be maintained by banks is_____: 
a) 25% 
b) 30% 
c) 35% 
d) 40% 
e) None

10. CRR funds are kept by the Banks in ____: 
a) Cash in hand at branches 
b) Balance with other banks 
c) Balance in a special Account with RBI 
d) Funds in the currency chest 
e) None

11. An increase in CRR by RBI leads to: 
a) Decrease in deposit 
b) increase in deposit 
c) Increase in lendable resources 
d) Decrease in lendable resources 
e) None

12. When RBI reduce the CRR it results into: 
a) Decrease in deposit 
b) increase in deposit 
c) Increase in lendable resources 
d) Decrease in lendable resources 
e) None

13. What is meant by development Oriented banking? 
a) Infrastructure financing 
b) Extending loans to States, which are undevelopment 
c) Taking up the task of develo-pment of the economy by providing support to under privileged sections of the society 
d) All the above 
e) None

14. Principal functions of SIDBI: 
a) Promotion of SSI 
b) Finance of SSI 
c) Development of SSI
d) All the above 
e) None 

15. ____ heads and conducts the affairs of RBI: 
a) Central Board 
b) local board 
c) Regional board 
d) All of the above 
e) None

16. RBI Provides ____ for meeting day - to - day receipt and expenditure mismatch to both Central and State Governments. 
a) treasury bills 
b) Ways and Means advance 
c) date and securities 
d) All the above 
e) None

17. RBI known as lender of last resort because: 
a) It has to meet the credit need of citizens to whom no one else is willing to lend 
b) Banks lend to go to RBI as a last resort 
c) It comes to help banks in times of crisis 
d) All of the above 
e) None 

18. These days RBI uses Selective credit control measures rather infrequently because of: 
a) Deregulation of functions 
b) Autonomy given to banks 
c) Comfortable liquidity 
d) Reasonable inflation level 
e) All the above 

19. Which is incorrect with regard to powers of RBI: 
a) Holds cash reserve banks
b) Controls banking system through licensing 
c) Supervises Banking system through inspection 
d) None of the above 
e) All

20.Intervenes in markets to maintain the external value of the Indian rupee: 
a) Exporters 
b) Importers 
c) RBI 
d) IMF 
e) None

21. In India, forex rates are determined by: 
a) Importers b) Exporters 
c) RBI d) Ministry of commerce 
e) Demand and supply forces 

22. Regional Rural Banks were set up on the recommendations of:
a) Nariman committee 
b) Narasimham committee 
c) Gadgil committee 
d) Puri committee 
e) None

23. committee, launched the process of reforms of financial system in India: 
a) Gadgil committee 
b) Nariman committee 
c) Narasimham committee 
d) khanna Committee 
e) None

24. Which of the following can be categories as a Merchant Banking service? 
a) Consultancy on finance to a company 
b) Advance in capital structure 
c) Managing mergers 
d) Helping in finalizing take over 
e) All the above 

25. The instrument which provides proprietary interest in company and which entitles a person to dividend on profits, is called? 
a) Bond 
b) Share
c) Debenture 
d) Warrant
e) Any of the above 

26. Which of the following provides proper definition of a Mutual Funds? 
a) It is an association of members of public 
b) These members want to invest in financial instrument 
c) They want to invest in financial instrument assts of business sector 
d) All the above 
e) None 

27. Which of the following organisations/agencies works solely to monitor and arrange flow of agriculture credit in India?
a)NABARD
 b) SIDBI 
c) RBI 
d)SEBI 
e) None of these

28. The currency notes of which of the following denominations are not printed in India ?
a) Rs. 5 
b) Rs. 10 
c) Rs. 50
d) Rs. 2500
e) Rs. 1000

29. Which of the following is not the name of a bank functioning in India?
a) Central Bank of India
b) UCO Bank
c) Aegon Religare 
d) Dena Bank
 e) ICICI Bank

30. When banks accept a fixed sum of money from an individual for a definite term and pay on maturity with interest, the deposit is known as : 
a) Term Deposit 
b) Demand Deposit
c) Bond
 d) Mortgage
e) Advance. 

31. Which of the following terms NOT used in banking/finance related matters ?
a) Discount Rate
b) Letter of credit
c) Policy Rate
d) Exchange rate
 e) Base rate

32. Who amongst the following is the chief of SEBI?
a) Milind Bhave 
b) UK Sinha 
c) Shashikath Verma
d) Shyamala Gopinath
e) None of these

33. Which of the following is a leading electronic-payment tec-hnology firm?
a) Visa 
b) Max
c) BSE
d) Sensex
e) SWAP

34. Global Market means market of :
a) USA 
b) China
c) OPEC members
d) European union countries 
e) All major countries and their alliances

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

BANKING AWARENESS TERMS

Nationalisation of Banks in India in Two stages: 

On 19th July 1969, 14 Private Sector Banks Nationalised In first Phase by Late Indira Gandhi, the then Prime Minister of India.
1) Allahabad Bank
2) Bank of Baroda
3) Bank of India
4) Bank of Maharashtra
5) Canara Bank
6) Dena Bank
7) Central Bank of India
8) Indian Bank
9) Indian Overseas Bank
10) Punjab National Bank
11) Syndicate Bank
12) Union Bank of India
13) United Bank of India
14) United Commercial Bank

On 15th April 1980, 6 Private Sector Banks Nation-alised in second phase.
1) Andhra Bank
2) Corporation Bank
3) New Bank of India - Merged With PNB in 1993
4) Oreintal Bank of Commerce - Global Trust Bank Merged with OBC.
5) Punjab and Sind Bank
6) Vijaya Bank

Important Bits:
1. Present RBI Governor is 
D. Subba Rao, I.A.S.
2. RBI Central Office Located at Mumbai.
3. Authority to Issue of Currency Notes into Circulation by 
Reserve Bank
4.Signature on Currency Notes by Governor of RBI.

5. Prouducts of Electronic Banking Innovation are -
A) Internet Banking
B) Electronic Funds Transfer
C) Offshore Banking
D) Mobile Banking
E) Smart Cards

6. Country's Largest Commercial Bank - State Bank of India.
7. NPA - Non-Performing Asset-
A loss to Bank or a bad debt.

8. Stale Cheque - A Cheque becomes Invalid from the date of Issue of 3 Months.

9. Negotiable Instruments are:- As per Negotiable Instrument Act, 1881, Promissory Note, Bill of Exchange and a Cheque.

10. State Bank of India Nationalised on - July 1st, 1955

11.State Bank Previously Know as - Imperial Bank of India.

12. RBI Functioning From: 
01-04-1935

13. Repo Rate - The Interest Rate Charged by RBI to Banks on Loans.

14. Reverse Repo Rate: The Interest Rate at which RBI borrows from other Banks.

15. BPLR - Bench Mark Prime Lending Rate Charged by a Bank to borrowers of Funds. 

Urban Cooperative Banks

The number of Urban Cooperative Banks (UCBs) whose license was cancelled in the last three yearsare, 31 in 2009-10, 12 in 2010-11 and 14 in 2011-12.

                 Reserve Bank of India (RBI), the licensing authority for UCBs announced in the Annual Policy Statement (2004-05) that no fresh proposals for new UCBs would be considered till a comprehensive policy including an appropriate legal and regulatory framework for the sector is put in place. There has been no change in the policy of RBI since then. An Expert Committee on the subject was constituted in April, 2010 which submitted its report to RBI in September, 2011.

                 RBI has, from time to time, taken a number of steps to strengthen the financial position of UCBs, which, inter alia, include ;-

·        Allowing merger of UCBs to encourage merger/amalgamation and to provide an avenue for non-disruptive exit route for weak UCBs;

·        Allowing UCBs to raise share capital;

·        Allowing financial restructuring of weak UCBs by conversion of deposits into equity;

·        Entering into MOU with State Governments/UTs and Central Government (for multi-State UCBs) to address the problem of dual control of UCBs by RBI and Registrar of Cooperative Societies; and

·        Setting up a Task Force on Urban Cooperative Banks in each State/UT with an objective to have a consultative arrangement for identifying weak and potentially viable entities and turning them around and also to provide a non disruptive exit path to unviable entities so as to ensure continuous process of monitoring of such UCBs

RBI directs Co-op banks to not grant loans for gold purchase

The RBI has directed State and Central co-operative banks not to give loans for purchase of gold in any form to curb the considerable increase in its import in recent years.

Currently, these banks are allowed to grant loans against pledge of gold ornaments, but not permitted to grant any advance for purchase of gold in any form. They offer loans for various purposes against the security of gold/gold ornaments as part of their lending policy.

Corporation Bank launches new variants of savings bank accounts

Corporation Bank has rolled out two new types of savings accounts namely SB Super and SB Signature.
A customer should maintain a minimum Quarterly Average Balance (QAB) of Rs 15,000 for SB Super and Rs 1 lakh for SB Signature.
Customers having any of the two accounts will be offered preferential loan processing. Both accounts offer bundled demat and trading account including a waiver of annual maintenance charges for the first year. They also bring concessions and offers like free NEFT, SMS banking, and 25 % concession in bank charges for gold coins.

Thirty Software companies detach from NASSCOM to form “iSpirt”

30 Indian software product companies have decided to form a new association called the Indian Software Product Industry Round Table, or “iSpirt”.
Why this separation:
Software companies involved in forming the new group have felt the need to create a new body which would be a group of Software Products companies rather than IT services companies like TCS, Infosys, and Wipro etc. which dominate NASSCOM. The objective is to bring all the software product companies (large and small) to share expertise and experiences, and create a larger awareness in society and government about the critical role the industry can play and something they believe they cannot effectively do under the larger NASSCOM umbrella. They have named the new body as Indian Software Product Industry Round Table, or iSpirt. Founding companies include Tally Solutions, QuickHeal, InMobi, Nucleus software, and industry stalwarts. The idea is to create and promote mass-solution software that can be bought off the shelf, like MS Windows or Office. The new association’s members want to offer education software for all schools rather than just IITs/IIMs.
The thirty founding members are led by Bharat Goenka, co-founder of Tally Solutions, Sharad Sharma, former head of Yahoo India R&D, startup mentor and founder of Brand Sigma, Naveen Tewari, founder of In-Mobi , and Vishnu Dusad, founder of Nucleus Software.
Why they are emphasizing on software products over software services?
Software services which are offered by IT service providers like TCS, Infosys cater to the needs of small number of people whereas the scalability of Software Product like Microsoft office, Tally is very high and many of its operations can be performed by the user itself.

Aircel offers ‘Mobile Money’

The Telecom operator Aircel has launched a new service called ‘Mobile Money’ in collaboration with ICICI Bank and Visa to enable its customers transfer money, pay bills and withdraw cash by using only their mobile phones—without having to make a trip to the bank or an ATM.  It is similar to Vodafone’s M-Pesa service which first pioneered to great success in Africa.
The service will be initially rolled out in Tamil Nadu, specifically for the Chennai – Tirunelveli corridor – to help migrant labourers send back money to their villages.
How does it work:
A person who wishes to transfer money from A location to B destination will have to deposit the money with a correspondent in the A area, after which an SMS is sent to the recipient confirming the transaction details. The recipient has to merely go to a banking correspondent in their respective area (B) to retrieve the cash.
This plan will work even if both parties have no ICICI bank account, with the minimum amount needed to start an account being Rs. 100. The company will make money by charging commission ranging from 1.5 to 3% on each transaction.

Amendments to the National Bank for Agriculture and Rural Development (NABARD) Act, 1981

The Union Cabinet  gave its approval to the amendments to the National Bank for Agriculture and Rural Development (NABARD) Act 1981.

The following amendments to the NABARD Act 1981 are proposed:

1.      Raising the authorized capital of NABARD to Rs. 20,000 crore from Rs. 5,000 crore.

2.      The meaning of cooperative society is proposed to be enlarged to include multistate cooperative societies registered under any Central law or any other Central or State law relating to cooperative societies.

3.      Change of ownership to facilitate the transfer of the remaining share capital of NABARD from the Reserve Bank to the Central Government.

4.      Increasing the scope of operations of NABARD under short term funding purposes and other changes.

The following benefits are projected by this amendment:-

1.  By increasing the authorized capital of NABARD to Rs 20,000 crore from Rs 5,000 crore, the ability of NABARD to mobilize resources from the market will be enhanced thereby new credit products, new credit linkages and new clients will be developed.

2.  The amendments allow NABARD to lend to new institutions, mainly Societies covered under multistate cooperative societies act and other central laws, producer organizations or such class of financial institutions which are approved by the Central Government. This is likely to benefit a larger segment of the financially excluded farmers in the country.

3.  The amendments allow combination of credit, creation of short term operations fund and swapping of debt of farmers.

4.  The decision of the Government to transfer the balance one percent shares to the Govt. of India from Reserve Bank of India (RBI) in NABARD shall be carried out, which will provide for increased public accountability, as the Government will acquire the equity held by RBI.

5.  NABARD will combine the post of Chairman and the post of Managing Director, into one, therefore Chairman and Managing Director, under the provisions of the NABARD Act relating to these two posts. This shall ensure a distinct line of command.

Background

        NABARD was established on 12 July 1982 to provide sharp focus to agriculture credit and rural development. NABARD adopted, as its mission, the promotion of sustainable and equitable development of agriculture and rural prosperity through effective credit support, related services, institution development and other innovative initiatives.

RBI cuts policy rates by 0.25 percent

After a long gap of nine months, the Reserve Bank (RBI) has reduced the short-term lending rate by 0.25 per cent to 7.75 per cent and Cash Reserve Ratio (CRR) by similar margin to 4 per cent thus released Rs 18,000 crores primary liquidity into the system. While repo rate cut will reduce the cost of borrowing for individuals and corporates, the reduction in CRR, which is the portion of deposits that banks have to park with RBI, would improve the availability of funds.

Following the repo rate revision, the other policy rates like reverse repo, bank rate, and Marginal Standing Facility Rate too will come down by 0.25 per cent.

These initiatives are aimed at encouraging investments, supporting growth and anchoring inflationary expectations.

Inflation has been the prime inhibiting factor that has prevented the RBI from cutting repo rate in the last nine months. The RBI, however, has reduced the growth projections for the current financial year to 5.5 per cent from its earlier estimate of 5.8 per cent.  On inflation, it moderated the rate to 6.8 per cent for March-end from earlier projection of 7.5 per cent.

What is CRR? Cash reserve Ratio (CRR) is the amount of funds that the banks have to keep with RBI. If RBI decides to increase the per cent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. What is SLR? Statutory Liquidity Ratio is the amount of liquid assets, such as cash, precious metals or other approved securities, that a financial institution must maintain as reserves other than the Cash with the Central Bank What is Repo and Reverse Repo rate? A repurchase agreement is the sale of securities together with an agreement for the seller to buy back the securities at a later date. The repurchase price should be greater than the original sale price, the difference effectively representing interest, called the repo rate. The party that originally buys the securities effectively acts as a lender. The original seller is effectively acting as a borrower, using their security as collateral for a secured cash loan at a fixed rate of interest. A reverse repo is simply the same repurchase agreement from the buyer's viewpoint, not the seller's. Hence, the seller executing the transaction would describe it as a "repo", while the buyer in the same transaction would describe it a "reverse repo". So "repo" and "reverse repo" are exactly the same kind of transaction, just described from opposite viewpoints. The term "reverse repo and sale" is commonly used to describe the creation of a short position in a debt instrument where the buyer in the repo transaction immediately sells the security provided by the seller on the open market.

Central Bank unveils limited period deposit scheme

Central Bank of India has launched a new limited period deposit scheme – Cent 101, to mobilise up to Rs 3,000 crore, for a short-term requirement of the bank.

Announcing the launch here, B. Akbaraly, Zonal Manager (South Zone), Central Bank of India, said in the last couple of days of soft launch, the bank managed to mobilise Rs 58 crore. “Our target is to collect at least Rs 560 crore before the end of March 31, from the Tamil Nadu and Kerala markets alone,” he said.

Elaborating on the scheme, R. Thiagarajan, Deputy General Manager of the bank, said the bank will pay 8.55 per cent interest, which is the highest in the industry. For senior citizens, it offers 9.05 per cent.

Minimum amount that can be deposited is Rs 1,000, thereafter in multiples of Rs 1,000 and the maximum limit is Rs 10 crore.

Earlier, the bank came out with a similar plan for 555 days – Cent 555, which was a great success, said Akbaraly.

HYBRID CARD:

The bank is also proposing to come out with a hybrid card, which will work as an usual debit card as long as the individual has balance in his bank account. Once the credit balance is exhausted by the individual, the card will automatically turn to be a credit card, he explained.

As on December 31, 2012, the bank has crossed 3.5 million debit card base. It has plans to launch co-branded debit, credit and pre-paid cards with several corporates.

The bank, being a late entrant to the ATM system segment, had only around 1,000 ATMs across the country by the end of 2011-12. In the current financial year, so far, it crossed the 2,000-mark. “In the next two months, we are planning to install another 500 ATMs across cities, to take the total to 2,500 by the end of the current financial year.

Vijaya Bank’s new credit cards target high net-worth individuals

Vijaya Bank has launched two credit cards ‘V-Platinum’ and ‘V-Privilege’ targeted at high net worth individuals (HNIs) and term deposit holders.

Launching the credit cards, H.S. Upendra Kamath, Chairman and Managing Director, said “We have set a target to issue 10,000 ‘V-Platinum’ cards and 5000 ‘V-Privilege’ by the end of this calendar year”

“The bank has issued around one lakh ordinary credit cards and has exposure of Rs 29 crore. But due to debit card, credit cards were not popular, hence today we have launched a variant of credit card targeted at HNIs and term deposit holders,” he added.

Vijaya Bank has drawn up a plan to issue both the credit cards by utilising the services of its 12,000 employee based and through its 1333 branches.

Amendments to Regional Rural Banks (RRBs) Act, 1976

The Union Cabinet today gave its approval to the proposed amendments in the Regional Rural Banks (RRBs) Act, 1976 to enhance authorized and issued capital to strengthen their capital base. The term of the non official directors appointed by the Central Government is proposed to be fixed not exceeding two years. 

The proposed amendments will ensure financial stability of RRBs which will enable them to play a greater role in financial inclusion and meet the credit requirements of rural areas and the Boards of RRBs will be strengthened. 

Background 

Regional Rural Banks (RRBs) were established under Regional Rural Banks Act, 1976 (the RRB Act) to create an alternative channel to the `cooperative credit structure and to ensure sufficient institutional credit for the rural and agriculture sector. RRBs are jointly owned by the Government of India, the concerned State government and sponsor banks, with the issued capital shared in the proportion of 50 percent, 15 percent and 35 percent, respectively. As per provisions of the Regional Rural Banks Act, 1976 the authorized capital of each RRB is Rs. 5 crore and the issued capital is a maximum Rs. 1 crore. 

Cheque Truncation System (CTS)

It is one of the major innovations in cheque clearing after the Magnetic Ink Character Recognition (MICR) cheques introduced in the 80s. Cheque truncation is a system between clearing and settlement of cheques based on electronic images.

This form of clearing does not involve any physical exchange of instrument. Bank customers would get their cheques realised faster as local cheques are cleared almost the same day as the cheque is presented to the clearing house, while intercity clearing happens the next day. Besides speedy clearing of cheques, banks also have additional advantage of reduced reconciliation and clearing frauds. It is also possible for banks to offer innovative products and services based on CTS.

Why is it needed:

Though MICR technology helped improve efficiency in cheque handling, clearing is not very speedy as cheques have to be physically transported all the way from the collecting branch of a bank to the drawee bank branch. The CTS is more advanced and more secure. Many countries have sought to address this issue with cheque truncation, in which the movement of the physical instruments is curtailed at a point in the clearing cycle, beyond which the process is completed, purely based only on the electronic data and images of the cheques.

What has been the international experience in this regard:

Denmark and Belgium are pioneers in CTS. They adopted complete cheque truncation system more than two decades ago. Sweden is the typical example for having achieved complete truncation where all the cheques can be presented and encashed at any branch; irrespective of the bank on which they are drawn. CTS also takes care of the needs of future electronic transactions.

What has RBI and banks done:

RBI has already enabled CTS to be fully functional in New Delhi. Soon even cheque clearing in Chennai will be settled through CTS. Banks have also taken steps to introduce appropriate technology to facilitate this system.

What are the salient features of CTS?

The physical cheque is truncated within the presenting bank itself. Settlement is generated on the basis of current MICR code line data. These images will be archived electronically and be preserved for eight years. A centralised agency per clearing location will act as an image warehouse for the banks.

Inter-Bank Mobile Payment Service

Inter-Bank Mobile Payment Service (IMPS) offers an instant, 24X7, interbank electronic fund transfer service through mobile phones. There are two types of IMPS services: A personto-person (P2P) service and a person-to-merchant (P2M) service. While the P2P service was launched some 18 months ago, P2M service was made available only recently.

HOW TO START A P2P OR P2M SERVICE:

Register your mobile number with your bank. Get a seven-digit Mobile Money Identifier, or MMID, number. This number is used to identify your bank and is linked to your account number. The combination of mobile number and MMID is unique for particular account, and the customer can link the same mobile number with multiple accounts in the same bank, and get separate MMID for each account. After this, get a Mobile Banking PIN, or M-PIN, which is a password to be used during transactions for authentication and security. Download mobile banking application or use the SMS facility provided by the bank to make a payment.

HOW TO SEND OR RECEIVE FUNDS FOR P2P TRANSACTIONS:

To send money, initiate an IMPS transaction using the mobile app or SMS. You need to enter the beneficiary's mobile number and MMID, amount and M-PIN for initiating a transaction. You will then receive a confirmation SMS for the transaction. To receive money, share your mobile number and MMID with the sender. The sender then initiates the above-mentioned steps. And you get an SMS confirmation for the money received.

HOW DOES THE P2M SERVICE WORK:

There are two ways in which P2M transactions can be performed: customerinitiated transactions (P2M PUSH) and merchantinitiated transactions (P2M PULL). P2M push transactions can be used for paying insurance premium, mobile /DTH recharge, credit card fee, utility bills, over-the-counter payments, and face-to-face payments such as pizza delivery, couriers and cabs. For P2M PUSH, a customer initiates transaction through the mobile banking app or SMS facility provided by the bank. For P2M PULL, the transaction is initiated through the website of the merchant. Plus you need to get a one-time password (OTP) from your bank.

IS THERE A CASH LIMIT:

Yes. Most banks cap the daily limit via IMPS app at Rs 50,000 per day. SBI limits transfers to Rs 1,000 per day through the SMS mode.

SBI ties up with Shriram Automall

State Bank of India (SBI) has entered into a pan-India tie-up with Shriram Automall India Ltd, a subsidiary of Shriram Transport Finance Company, for assisting in post-seizure, warehousing and sale of seized tractors through organised public sale.

SBI, in a statement said, the tie-up would help the company in better price recovery of impaired assets in the form of tractor loans, as Shriram Automall will offer end-to-end solution through more than 65 auto malls.

The auto mall offers a common meeting platform for potential buyers and sellers where the valuation of the vehicle is determined through a transparent process.

“It is expected that a large number of non-performing tractor loan accounts would be addressed through this tie-up in the coming months. Apart from ensuring optimum recovery from the sale of old tractors, this tie-up is expected to create a market for pre-used tractors also where SBI may explore lending opportunities,’’ the bank said.

42% workers are now ‘middle-class’: ILO report

The middle class is rising in a big way, especially in developing countries. About 42 per cent of workers, or nearly 1.1 billion, are now ‘middle-class’, living with families on over Rs 225 ($4-13) per person per day, says a new ILO report.

By 2017, the developing world could see the addition of 390 million more workers in the middle class, the International Labour Organisation (ILO) report says.

“Over time, this emerging middle-class could give a much needed push to more balanced global growth by boosting consumption, particularly in poorer parts of the developing world,” said Steven Kapsos, one of the authors of the Global Employment Trends 2013.

Employment growth

However, the report raises a red flag for employment growth in 2013-14, even if there is a moderate pick-up in output growth.

It estimates that the number of unemployed worldwide may rise by 5.1 million to more than 202 million in 2013 and by another 3 million in 2014, half-a-million of which will be youth.

“The indecision of policy-makers in several countries has led to uncertainty about future conditions and reinforced corporate tendencies to increase cash holdings or pay dividends rather than expand capacity and hire new workers,” says the report.

GDP growth

The ILO report noted that in India, growth in investment contributed 1.5 percentage points to the overall GDP growth over the past year, down from 1.8 percentage points in 2011, while the contribution from consumption declined to 2.8 per cent versus 3.2 per cent the previous year.

Job creation, labour productivity

For countries such as India, the report called for focus on both employment creation and labour productivity.

It noted that in India, even where jobs were created, a large number of workers remained in agriculture (51.1 per cent), in the urban informal sector or in unprotected jobs (contract) in the formal sector.

The share of workers in manufacturing was just 11 per cent in 2009-10, no higher than a decade earlier.

Like many regions, growth has failed to deliver a significant number of better jobs in the formal economy.

Formal employment

Most notably in India, the share of formal employment has declined from around 9 per cent in 1999-2000 to 7 per cent in 2009-10, in spite of record growth rates, it said quoting a study.

Using a comparable definition for the latest year available, the report said the share of workers in informal employment in the non-agricultural sector stood at 83.6 per cent in India (2009-10), 78.4 per cent in Pakistan (2009-10) and 62.1 per cent in Sri Lanka (2009).

Significantly, the report noted that unemployment rates increased rapidly for high-skilled workers, especially women.

“Indians with a diploma suffer particularly, with unemployment rates reaching 34.5 per cent for women and 18.9 per cent for men during 2009-2010,” it added.

RBI hikes FII limit in Govt securities, corporate bonds by $5 billion

The Reserve Bank today hiked FII investment limits in Government securities and corporate bonds by $5 billion each, taking the total cap in domestic debt to $75 billion, with a view to bridging the current account deficit.

Further liberalising the norms, the three-year lock-in period for foreign institutional investors (FIIs) purchasing Government securities (G-Secs) for the first time has been done away with, RBI said.

The sub-limit of $10 billion for investment by FIIs and long-term investors in G-Secs stands enhanced by $5 billion, it said.

The limit in corporate debt, other than infrastructure sector, stands enhanced from $20 billion to $25 billion, RBI said.

With an increase of $5 billion in each of the two categories, FIIs and long-term investors can now invest $25 billion in G-Secs and $50 billion in corporate debt instruments, taking the total to $75 billion.

The earlier FII investment limit in G-Secs was $20 billion and for corporate debt it was $45 billion, including a sub-limit of $25 billion for infra bonds.

RBI further said: “Residual maturity condition shall not be applicable for the entire sub-limit (in G-Secs) of $15 billion but such investments will not be allowed in short-term paper like Treasury Bills, as hitherto”.

The overall FII limit of domestic debt is distributed through a host of categories across Government, corporate and infrastructure debt.

Long-term investors include sovereign wealth funds, multilateral agencies, pension funds and foreign central banks.

Government, which is battling a high current account deficit (CAD) — the gap between inflows and outflows of foreign funds — is trying to attract more foreign funds into the country.

The CAD touched a record high of 5.4 per cent in the July-September quarter of the current fiscal.

In order to check the outflow of foreign currency, the Government recently hiked the import duty on gold and also took steps to encourage mutual funds to park their gold in deposit schemes offered by banks.

As a measure of further relaxation, the RBI added that it had dispensed with the one-year lock-in period on holding infrastructure bonds.

Developing nations top global FDI index for first time in 2012: UN

Developing countries overtook their traditionally wealthier counterparts in attracting foreign direct investment for the first time last year, as industrialised nations bore the brunt of an 18 per cent plunge in FDI flows, the UN’s trade and investment think tank Unctad has said.

Last year, global foreign direct investments — when a company in one country invests for instance in production facilities or buys a business in another country — came in at $1.3 trillion, down from $1.6 trillion in 2011, Unctad’s Global Investment Trend Monitor showed.

In a dramatic shift on the global investment scale, developing countries reaped $680 billion of that, or 52 per cent of the total.

“For the first time in history, developing countries have attracted more investment than developed countries,” James Zhan, who heads UNCTAD’s investment and enterprise division, told reporters in Geneva.

The shift was largely prompted by evaporating investments in crisis-hit developed economies like the United States, European nations and Japan, which accounted for 90 per cent of the $300 billion-decline in global FDI last year, Zahn said.

“We thought we were on the way to a steady recovery, (but) the recovery has derailed,” added Zahn, who pointed out that global investment figures had turned upwards in 2010 and 2011. But amid growing market uncertainty, they fell last year to near the historic low of $1.2 trillion which came during the worst of the global financial crisis in 2009.

The US, which remains the world’s largest recipient of foreign direct investment, saw its FDI inflows slip more than 35 per cent to $147 billion, while Germany saw its net investment level plunge from $40 billion in 2011 to just $1.3 billion last year, mainly due to large divestments there.

“Developing countries also suffered from the global decline,” Zhan said, “but the decline was much more moderate.”

Asia, which raked in 59 per cent of all FDI to developing countries, saw its inflows dip 9.5 per cent, with China, the world’s second-largest recipient of such investments, registering a 3.4-per cent drop in 2012 to $120 billion.

South America and Africa meanwhile registered positive growth in FDI flows last year.

Last year’s overall drop in investments came despite the fact that the global economy grew 2.3 per cent in 2012, while worldwide trade was up 3.2 per cent.

Going forward, Unctad expects FDI flows to rise to just $1.4 trillion this year and to $1.6 trillion in 2014 — still far below the 2007 pre-crisis level of some $2.0 trillion in investments.