March Final Issue.pmd - CHANGE 'Gateway to All Competitive Exams'

More documents

Recommendations

Info

MARCH 2012 Get Previous Issues Free of Cost on Our Website: www.changetabloid.com Moody’s Upgrades India’s Shortterm Foreign Currency Rating Moody’s has upgraded its credit rating on short-term deposits in foreign currency from speculative to investment grade. Such an upgrade will help banks to attract foreign currency deposits. The upgrade is in line with the rating revision in three other instruments, which were all placed in a higher category by the rating agency on December 20. According to the India’s external debt position, shortterm external liabilities for commercial banks have come down from $860 million to $763 million as of end September 2011. This amount was $898 million at the end of March 2011. The numbers highlight the increased withdrawals from foreign currency accounts. ‘Not Prime’ to ‘P3’ A Finance Ministry statement said that the short-term country ceiling on foreign currency bank deposits has been increased from ‘Not Prime (NP)’ to ‘P-3’. P- 3 denotes prime and such a rating indicates acceptable ability to repay short-term obligations. Short-term here means deposits with maturities up to one year. In December 2011 Moody’s upgraded the ratings on long-term government bonds denominated in domestic currency from ‘Ba1’ to ‘Baa3’, or from speculative to investment grade. Besides, the long-term country ceiling on the foreign currency bank deposits was also upgraded from ‘Ba1’ to ‘Baa3’. SEBI Allows Promoters for Auctioning of Stakes through Stock Exchanges In a move that could kick-start the government’s divestment programme as well as help promoters of companies to sell a part of their holdings, the capital market regulator SEBI on 3 rd January 2012 allowed auctioning of securities through stock exchanges and introduced a new method for institutional placement of stocks. As per the auctioning route, a special window can be used by promoter stakeholders to sell at least 1% of the paid-up capital of a company. This will be similar to the block-deal mechanism for secondary stock market transactions, but with lesser restrictions. Under the institutional placement programme (IPP), shares can be sold only to qualified institutional buyers. Exchanges will provide a separate window for the offer for sale of shares which will co-exist with the normal trading hours. Promoter or promoter group of companies however will not be allowed to bid for the shares. Allotment will be done either on price priority or clearing price basis proportionately and would be overseen by the exchanges. SEBI’s measure is considered to be very progressive step towards creating an organised and effective mechanism that will not only facilitate fund raising but also assist companies to comply with the listing norms in a non-disruptive manner. There shall be at least 10 allottees in every IPP issuance. No single investor shall receive allotment for more than 25% of the offer size. For the purpose of compliance with public holding norms, SEBI had earlier directed all such promoter shareholders to dilute their equity stake to 75% or below by June 2013 through public offering of shares. The companies’ were also barred from using the qualified institutional placement (QIP) route for diluting promoters’ shares. However, the new institutional placement route can be used for either fresh issue of shares or dilution by the promoters through an offer for sale. The IPP method can be used to increase public holding by 10% and could be offered to only qualified institutional buyers with 25% being reserved for mutual funds and insurance companies. No Floating Interest Rates on Small Savings Schemes: Finance Ministry The Finance Ministry on 4 January 2012 clarified that the rates applicable on small savings instruments schemes would be announced on April 1 each year and the rate would remain valid till the maturity of the scheme. The Ministry stated that barring the Public Provident Fund (PPF), the rates of interest on all small savings schemes will remain fixed throughout the tenure of investment. To clear the confusion over the returns on investment in small savings schemes, the Finance Ministry pointed out that the rate prevailing at the time of investments will remain fixed and unchanged till the maturity of the investment. Any revisions in interest rates in the subsequent years would only be applicable to the investments made in the relevant period. However, the rate of interest for the 15-year PPF scheme would not remain fixed for the entire period as the interest accruals in the PPF account each year would vary, depending on the interest rate announced for that particular year. For PPF, the interest rate fixed every year will be applicable to all PPF accounts. The government had hiked the interest rates on small savings deposits schemes of various maturities with effect from 1 December 2011 to channel the outflow of funds from small savings schemes administered by the National Small Savings Fund (NSSF) in view of the investor preference for bank term deposits. The clarification from the Finance Ministry came in the face of fears that the revision of interest rates on small savings schemes from 1 December 2011, are floating rates and that the rates will undergo change in sync with fluctuations in yields on government securities. It had also hiked the interest rates on PPF deposits from 8 per cent to 8.6 per cent while raising the ceiling on annual contributions to the fund to Rs.1 lakh from Rs.70000. Interest rates on Post Office Savings Accounts rose to 4 per cent from 3.5 per cent. Similarly, interest rates on deposits of various maturities of one year, two years and five years too were raised from December. The sale of Kisan Vikas Patra (KVP) has been discontinued from November 30, 2011. The maturity period of Monthly Investment Schemes (MIS) and National Savings Certificates (NSCs) been reduced from six years to five years. IRDA Issues Uniform Norms to Ensure Solvency of Insurance Companies Insurance regulator IRDA on 4 th January 2012 introduced uniform asset-liability management norms for market players to ensure their solvency and asked firms to undertake stress tests to ascertain their ability to meet financial obligations in the event of a crisis. The Asset-Liability Management (ALM) norms, IRDA said, are “critical for the sound management of the finances of the insurers that invest to meet their future cash flow needs and capital requirements.” The guidelines, which would come into effect from April 1, 2012, make it mandatory for insurance companies to prepare an ALM policy and have it approved by the Insurance Regulatory and Development Authority (IRDA) by March-end. With regard to stress-testing, IRDA has asked the insurance companies to determine their ability to meet financial liabilities after taking into account factors like a 30 per cent fall in equity values and a one percentage point decline in yields on fixed investments, among others. IRDA has issued these guidelines to bring about uniformity in the ALM norms being followed by both life and non-life insurance companies. Upon examination of the extant norms being followed by insurance companies, IRDA found they were “incomplete and inconsistent. As the mandate by the authority was very broad, each insurer had adopted their own measures in reporting such details”. SIDBI Inks Pact with IOB Small Industries Development Bank of India (SIDBI) entered into a memorandum of understanding with Indian Overseas Bank (IOB) on 6 January 2012 to extend assistance to micro, small and medium enterprises (MSME) customers of IOB. The MoU was signed by S. Muhnot, Chairman and Managing Director of SIDBI, and M. Narendra, Chairman and Managing Director of IOB. Indian Overseas Bank (IOB) received Rs 100 crore from Small Industries Development Bank of India (Sidbi), as part of refinancing agreement. SIDBI lined up Rs 2000 crore equity investment in the country’s micro, small and medium enterprises (MSME). As per the Agreement SIDBI would initially provide a line of credit worth Rs. 100 crore to IOB for seven years. The amount is to be utilised to provide growth capital to deserving MSMEs for funding their growth requirements towards any bonafide business purpose, including bridging the gap in project funding, working capital margin, intangible expenses. The assistance to MSMEs could be through a variety of instruments such as subordinate debt, mezzanine/ convertible instruments such as optionally convertible debentures and redeemable preference shares. On a selective basis, IOB would also provide equity funding where business model or exit options would clearly support such investments. IOB in 2011-12 During 2011-12, the bank disbursed Rs 1983 crore to the sector, which is a growth of 17 per cent compared 2010- 11. Total aggregate disbursements stood at around Rs 13822 crore and number of accounts 44871. IOB recently received an award for its performance in MSME lending during 2010-11 from the President. Union Government Measures Union Government had created the Risk Capital Fund for MSMEs within SIDBI and SIDBI in turn, formed a separate business unit, SIDBI Foundation for Risk Capital. The objective was to develop and operationalise appropriate risk capital products for MSMEs of different sizes, constitution and in different industry segments. Apart from direct funding by SIDBI, various delivery channels such as banks and venture capital (VC) funds is to be used for providing risk capital to MSMEs. Reliance Enters Media by Opening Purse Strings for Network18 Mukesh Ambani’s Reliance Industries Ltd (RIL) and the nation’s biggest private sector company has finally broken the ice and ended speculation regarding its entry in the media and entertainment segment. RIL has now entered into a major investment deal with the Raghav Bahl-controlled Network18 Group. The company is one of India’s largest broadcasters owning several news and entertainment channels. RIL will help Network18 in financing the purchase of a leading regional language competitor, Eenadu. While doing so, RIL will ensure a stake for itself in Network18’s range of businesses. The deal will involve several stages and have Reliance Industries invest about Rs. 1, 700 crore in the Network18 Group. Considering the monies involved, this could easily turn out to become a landmark transaction in India’s media and entertainment industry. At present, Network18 is in a huge debt but with the merger of Eenadu, it will emerge as a bigger and stronger enterprise. Reliance will leverage its deep understanding of Indian markets - consumer insights, technological expertise and the ability to build and manage scale to make this a win-win partnership. This will create value and be accretive to the shareholders of RIL. Eenadu Eenadu is one of the country’s largest media companies and operates several regional language news and entertainment channels. It also operates the highly successful Telegu language news and entertainment channel. The insurers would have to put in place effective procedures for monitoring and managing their assetliability positions to ensure that their investment RIL invested about Rs 2600 crore in Eenadu channels. It Under the IPP, companies will have to announce the activities and asset positions are appropriate to their owns 100% economic interest in ETV Uttar Pradesh, ETV ratio of buy-back, as is done in the case of rights issues liability, risk profiles and solvency positions. The ALM Madhya Pradesh, ETV Rajasthan, ETV Urdu and ETV and fix a record date for determination of entitlements as policy should enable the insurers to understand the risks Bihar. It also owns 100% economic interest in ETV per shareholding on record date. Besides improving they are exposed to and develop ALM policies to manage Marathi, ETV Kannada, ETV Bangla, ETV Gujarati and efficiency, the revised buy-back process is expected to them effectively. In addition, the ALM can be used to ETV Oriya. In the Telugu channels, ETV Telugu and give a fair deal to all shareholders. measure the interest rate risk faced by insurers. ETV Telugu News, RIL’s economic interest is 49%. CHANGE THE ONLY CONSTANT THING : We Bring You More Informative and Detailed Coverage Every Month 14
MARCH 2012 RBI Decided to Ease Liquidity by Buying Back Gilts for an Amount of Rs 10000 crore The Reserve Bank of India on 3 January 2011 decided to conduct an open market operation (OMO) to inject more liquidity into the system. The RBI will buy up to Rs 12000 crore of government bonds via open market operations on 6 January 2012, including the 10-year paper which till recently was the benchmark paper. The central bank has decided to ease liquidity by buying back gilts for an amount of Rs 10,000 crore in the backdrop of banks accessing the Reserve Bank of India (RBI)’s borrowing window for more than Rs1 lakh crore each day. RBI announced an auction for Rs 10, 000 crore worth of bonds, otherwise known as open market operation (OMO). The OMO announcement came after the market trading hours. The Reserve Bank of India decided to conduct open market operations consistent with the stance of the monetary policy and based on the current assessment of prevailing and evolving liquidity conditions. Banks have been borrowing in excess of Rs 1 lakh crore a day from the RBI’s liquidity adjustment facility (LAF) or repo window. The liquidity deficit in the system in recent weeks has been way beyond the limit of 1% of the net liabilities of the system, or around Rs 55000 crore. The central bank, by conducting OMOs tries to balance out liquidity and price stability in the bond market. The yields are expected to come down to 8.75% levels whenever the central bank announces OMOs while they could rise to 8.90% ahead of the bond auction. The central bank had earlier conducted a Rs 10000-crore OMO on 24 November 2011 where it managed to purchase Rs 9435 crore worth of bonds. Yield on the benchmark bond had come off close to 10 basis points after the RBI had announced an OMO on 14 November. The yield on the benchmark treasury paper jumped about 60 basis points since the government announced on 29 September 2011, that it would need to borrow an additional amount of around Rs 52, 900 crore in 2011-12. Between October 2011 to March 2012, the government will auction an average of Rs 13000 crore worth of new paper every week. In addition to cash management bills, treasury bills as well as state development loans will be auctioned. TRAI Directs Telecom Companies to Block Pesky SMSes Originating from Abroad Tightening the noose around pesky SMS senders further, the Telecom Regulatory Authority of India (TRAI) today issued a directive to telecom companies to block international SMSes as per the rules applicable to SMSes originating within the country. The new regulations on unsolicited telemarketing calls and SMS were not being properly followed, the TRAI stated that there were several incidences of promotional SMS being routed through the servers located at international destinations and delivered to customers registered for not receiving telemarketing calls. TRAI observed that generally such SMSes originated from locations within Germany, Sweden, Nauru, Fiji, Cambodia, Bosnia, Albania, Grenada, the United Kingdom, Jersey, Sint Maarten, Tonga, Vanuatu, Namibia, Panama, and Antigua and Barbuda. These SMSes contain the headers which are alphanumeric or starting with +91 or numbers with international codes. The regulator thus ordered all telecom companies to ensure that no international SMS containing an alphabet header or alphanumeric header or +91 as the originating country code is delivered through their networks. Also, if any source or number from outside the country generates more than 200 SMSes an hour with a similar signature, these could not be delivered through the network. For More Current Coverage and Daily Updates Visit Our Website: www.changetabloid.com Parliamentary Panel Favours Doubling of Penal fee for Trading Violations The Parliamentary Standing Committee submitted its report on a bill to amend the Forward Contracts Regulation Act 1952. Parliamentary Standing Committee on consumer affairs, food and public distribution, chaired by Congress MP Vilas Baburao Muttemwar, submitted its report on the FCRA (Amendment) Bill 2010 to Parliament on 22 December 2011. The current department-related standing committee (DRSC), set up in 2009, was asked by the Lok Sabha speaker in December 2010 to prepare a report on the bill and submit it to the Lok Sabha Secretariat. The committee in its report recommended a doubling of the maximum penalty for trading rule violations to Rs 50 lakh. The standing committee report suggested raising the upper limit on penalties for offences like insider trading to Rs 50 lakh from Rs 25 lakh stipulated in the Forward Contracts Regulation Act (FCRA) Amendment Bill 2010. Insider trading involves using unpublished price sensitive information for personal gain. The bill seeks to empower commodity futures market regulator Forward Markets Commission on par with its securities markets counterpart. It is seen as the singlemost important reform in the eight-year-old commodity exchange market. The report recommended that options be introduced for the benefit of stakeholders. The inclusion of the clause was one of the reasons why the bill in its earlier avatar during the UPA I regime faced resistance. Those who had opposed the bill then especially the Left parties argued that options would increase speculation in commodities. The report suggested that options will actually make it easier for farmers and smaller users to participate in the derivatives market as trading lot sizes will be lower than in futures contracts, where the minimum traded quantity for most farm products is 10 tonne. Investing in an option also tends to minimise losses as only the premium to buy (call option) or sell (put option) is forgone in the event of prices moving adversely. a futures position taken by a trader is on the other hand marked to market daily. Marking to market involves daily settlement of the difference between the prior agreed price and the daily futures price. It can thus lead to huge losses alongside supernormal profits. Targeting Disinvestment Govt to Incentivise PSU Listings Running short of disinvestment target in the current fiscal, the government will incentivise the unlisted PSUs to come up with initial share offerings in the stock market in 2012-13. At present, there are about 50 PSUs which are listed and their shares are actively traded in the stock market. The government has already decided that unlisted PSUs with no accumulated losses and having earned net profit in three preceding years should come out with Initial Public Offerings (IPOs) even as the state holding would not come below 51 per cent. One of the options to incentivise the PSUs for IPOs is to put this task in the memorandum of understanding (MoU) which an individual enterprise signs with its administrative ministry. Under the MoU system, annual targets are set for the PSUs and CEOs get personal appraisal points if the tasks are achieved. While about 50 PSUs including Hindustan Aeronautics Ltd and Heavy Engineering Corporation Ltd which can be listed on stock exchanges did not opt for the same. The government had set a target of raising Rs 40,000 crore through stake sale in PSUs in the current fiscal. With only three months remaining, it has been able to mop up merely Rs 1,145 crore through disinvestment in Power Finance Corporation. To achieve the mammoth target, the Finance Ministry is working on several methods including share buyback by cash-rich PSUs. ADB Loan Cleared for Road Works in Naxal-hit Villages The Union government on 7 th January 2012 has cleared an external loan to finance part of the programme launched by the Ministry of Rural Development in left wing extremism-affected villages. The clearance is for a loan of $500 million from the Asian Development Bank (ADB) to speed up construction of rural roads. Union Minister of Rural Development Jairam Ramesh has urged Finance Minister Pranab Mukherjee to issue directions for negotiating and early signing of the loan, which his Ministry has cleared, to shore up resources to give thrust to the Pradhan Mantri Gram Sadak Yojana (PMGSY) that is way behind schedule. The ADB, which has already extended a loan of $800 million, has been petitioned with a fresh proposal for rural connectivity investment programme to construct or upgrade 7,000 km of roads connecting eligible habitations in Maoist-affected States of Bihar, Chhattisgarh, Madhya Pradesh, Odisha, West Bengal, besides Assam where too the PMGSY has progressed with little to cheer. Incentives to Locals The demand for the loan was made in the backdrop of the MoRD’s multi-winged programmes in the left wing extremism-affected areas, under which Central forces assist execution of welfare and development schemes to wean the local people from the path of naxalism. The MoRD has been providing incentives and assistance to the local people, particularly tribals, to reduce poverty and ensure economic growth of the region. Rural connectivity is considered pivotal to the success of this stratagem. As per the programme proposed by the MoRD, the Union government will supplement with a contribution of $127.6 million, in addition to the $5000 million to finance the project that includes setting up of training and research centres pertaining to rural roads. The programmewas supposed to have covered all habitations with a population of 500 people (250 people in the case of tribal and hilly areas) by 2007. Provision of rural connectivity to habitations of 500 people in general areas and 250 people in tribal areas need to be worked upon on pririty basis. Govt Approves RIL’s $1.5 bn KG-D6 Satellite Field Plan The Union government on 3 January 2012 approved Reliance Industries’ (RIL) $1.529 billion investment plan for developing four satellite fields in the flagging KG- D6 block. RIL’s investment plan will boost falling output in the Krishna-Godavari Basin KG-D6 block. The investment proposal was signed by the three partners in the block- RIL, UK’s BP Plc and Niko Resources of Canada and the representative of DGH. The KG-D6 block oversight committee, which includes officials from the Oil Ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), met for the third time in three months on 3 January to finally approve the proposal. The MC approval, which is the final approval an operator needs before beginning work, put a cap on the cost of developing the four fields that surround the currently producing Dhirubhai-1 and 3 (D-1 & D-3) fields in the KG-D6 block. The cost cannot vary by more than 15%. The MC had at its two previous meetings in November and December 2011 refused to approve the field development plan (FDP) for the Dhirubhai-2, 6, 19 and 22 (D-2, D-6, D-19 and D- 22) fields after the government representative raised certain objections. RIL agreed to cap spending on the four fields at $1.529 billion, plus or minus 15%. The four fields can produce 10 million cubic metres of gas per day by 2016, which will help shore up output from the block, which has seen a 35% decline in production in the past 15 months. For More Economy Coverage Read Our SOCIO ECONOMY MONTHLY CHANGE THE ONLY CONSTANT THING : We Bring You More Informative and Detailed Coverage Every Month 15
Page 1 and 2: MARCH 2012 Govt Appoints B K Batra
Page 3 and 4: MARCH 2012 Infosys Prize Conferred
Page 5 and 6: MARCH 2012 SUMMIT | CONFERENCE 15th
Page 7 and 8: MARCH 2012 India Signs Internationa
Page 9: MARCH 2012 Government Notifies 100%
Page 13 and 14: MARCH 2012 2G case: SC Allows Swamy
Page 15 and 16: MARCH 2012 For More Current Coverag
Page 19 and 20: MARCH 2012 CCS Clears 950 Million E
Page 21 and 22: MARCH 2012 RAJASHTHAN Rajasthan Gov
Page 27 and 28: MARCH 2012 1. Scientists produced a
Page 29 and 30: MARCH 2012 68. Which Photography Pi
Page 35 and 36: MARCH 2012 SOCIOLOGY AS AN OPTIONAL

March Final Issue.pmd - CHANGE 'Gateway to All Competitive Exams'

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?