Ways and Means Advances (WMA)

The Reserve Bank of India (RBI) has increased the Ways and Means Advance (WMA) limit for States and Union Territories (UTs) to ₹60,118 crore from the previous limit of ₹47,010 crore. This increase aims to help States and UTs manage their fiscal situations more effectively. Purpose: WMA is a facility provided by RBI to address temporary mismatches in cash flow between receipts and payments.

Trends in Remittance

Trends in Remittance: Key Insights from the World Bank's Migration and Development Brief 1. Overview of Remittances Definition: Remittances are funds sent by migrants to their families or relatives in their home countries while they are working abroad. These transfers are vital for recipient countries, contributing significantly to household incomes and foreign exchange reserves. Me

Variable Rate Repo (VRR)

The Variable Rate Repo (VRR) is a monetary policy tool used by the Reserve Bank of India (RBI) to manage short-term liquidity in the banking system. Here's a detailed overview: About VRR Purpose: Infuse Liquidity: The VRR mechanism is employed when the RBI wants to inject liquidity into the banking system, particularly when banks are hesitant to borrow at the fixed Repo Rate due to

Insolvency and Bankruptcy Code

The proposed amendments to the Insolvency Resolution Process for Corporate Debtors under the Insolvency and Bankruptcy Code (IBC) by the Insolvency and Bankruptcy Board of India (IBBI) aim to address several critical areas to improve the efficiency and effectiveness of the Corporate Insolvency Resolution Process (CIRP). Here’s a breakdown of what these amendments might entail and their poten

External Commercial Borrowings (ECBs)

External Commercial Borrowings (ECBs) are a mechanism that allows eligible Indian entities to access foreign funds, contributing significantly to the financing of various projects and operational needs. What are External Commercial Borrowings (ECBs)? Definition: ECBs refer to commercial loans obtained by eligible resident entities from non-resident entities. These loans are a means for In

PUMP DUMP SCHEME

A "pump and dump" scheme is a type of financial fraud where the price of a stock is artificially inflated through deceptive practices, allowing perpetrators to sell their shares at the inflated price before the price crashes. Here’s a more detailed breakdown: How It Works Pump Phase: Promotion: Fraudsters use false or misleading information to create hype around a

Syndicated loan

A syndicated loan is a type of financing arrangement where multiple lenders come together to provide a large loan to a borrower. This method is commonly used for significant financing needs, often exceeding the capacity of a single lender to provide alone. Key Points of Syndicated Loans Participation of Multiple Lenders: In a syndicated loan, a group of lenders (usually banks or f

Revised Priority Sector Lending Norms

Why in the News? The Reserve Bank of India (RBI) has updated the Priority Sector Lending (PSL) norms to enhance credit flow in economically disadvantaged districts where average loan sizes are low. This revision aims to encourage more small loans in areas that traditionally have lower access to credit. Key Changes in PSL Guidelines Incentive Framework: Objective: To boost lending

RBI Governor pushes for group insolvency mechanism

Context: RBI Governor Shaktikanta Das advocates for a specified framework for the group insolvency mechanism and a vibrant market for stressed assets in India to enhance the functionality of the Insolvency and Bankruptcy Code (IBC). News: Legislative changes to establish appropriate principles for the group insolvency mechanism, addressing challenges like intermingling of assets, defining

Post Payments Bank

Context: India Post Payments Bank enter into MoU with Hindustan Zinc to offer financial inclusion services to its CSR beneficiaries. Significance of the MOU: The collaboration will ensure in creating a lasting impact on the lives of community beneficiaries around Hindustan Zinc’s operational areas.  The key services provided by the IPPB will ensure Financial Inclusion and ens

‘Swayam Siddha’

Swayam Siddha is a financial product from the State Bank of India (SBI) that provides loans to women entrepreneurs from Self Help Groups (SHGs). The loans can be up to 5 lakh rupees.

Windfall tax – Petroleum

India cut its windfall tax on petroleum crude to 1,700 rupees ($20.53) a tonne from 2,300 rupees a tonne, according to a recent government notification. Windfall Tax It is a tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above-average profits. The term “windfall” refer

Investment bankers

An investment banker is an individual who often works as part of a financial institution and is primarily concerned with raising capital for corporations, governments, or other entities. Examples of investment banker employers - Goldman Sachs (GS), Morgan Stanley (MS), JPMorgan Chase (JPM), Bank of America Merrill Lynch (BAC), and Deutsche Bank (DB).

Show Cause Notice by Financial Intelligence Unit

Context: India’s Financial Intelligence Unit has issued show-cause notices to nine offshore crypto-currency operators, including Binance, for not complying with the Prevention of Money Laundering Act, 2002 (PMLA). News: Show Cause Notices for compliance have been sent to nine offshore Virtual Digital Assets Service Providers (VDA SPs) under Section 13 o

Small finance bank

Context: Recently, Small finance bank (SFB) campaigns were launched.The initiative aims to showcase the achievements of Small Finance Banks (SFBs) in terms of their business models to various stakeholders. About Small Finance Bank (SFB): Small Finance Banks are financial institutions dedicated to providing financial services in regions that are underserved and unbanked. They are i

First advance estimates of national income released by the National Statistical Office (NSO)

Context: India’s real GDP growth in 2023-24 is estimated at 7.3%, compared to 7.2% a year ago, as per the first advance estimates of national income released by the National Statistical Office (NSO), which reckon the economy will outperform the 7% uptick recently projected by the Reserve Bank of India (RBI). About NSO (National Statistical Office): Role and Affiliation: The NSO ser

Credit Rating Agencies and INDIA

Recently, India released a document titled ‘Re-examining Narratives: A Collection of Essays’ to present alternate perspectives on economic policy that have long-term implications for India’s growth and development priorities. What are credit rating agencies? Credit Rating Agencies (CRA) – According to IMF, they are private companies that assess credit risk&n

Asset quality of Indian banks improves to decadal high: RBI

Background: As per the Financial Stability Report by the Reserve Bank of India (RBI), the Gross Non-Performing Assets (GNPA) ratio reached 5% in September 2022. Concurrently, the ratio of Net Non-Performing Assets (NPAs) to net advances has decreased to 1.3% in September 2022, marking the lowest point in the last decade. The NPAs had experienced an increase from 3.8% in 2014 to 11.4% in 2018. H

Nation’s first interstate multi-modal transport hub coming up near Delhi airport

CONTEXT: The proposed hub located near the GMR Aerocity will provide connectivity through an Interstate Bus Terminus, Delhi Metro, the proposed Passenger Transport Centre, and proposed Rapid Rail Transit System station. Delhi International Airport Limited (DIAL) plans to develop India's first multi-modal interstate transport hub near Aerocity, focusing on integrating bus, metro, and air

New royalty rates for strategic minerals

New royalty rates for strategic minerals     Why in the News? The centre has recently approved royalty rates of 3% each for lithium and niobium and 1% for Rare Earth Elements (REEs). What does the new royalty rates imply? The Second Schedule of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) was amended to specify the rate of royalty

The impact of Claudia Goldin’s work-Nobel Prize in Economics

The impact of Claudia Goldin’s work-Nobel Prize in Economics Why in the News? The Sveriges Riksbank Prize in Economic Sciences for 2023 by the Royal Swedish Academy of Sciences was awarded to Harvard University Professor Claudia Goldin. She was awarded for “having advanced our understanding of women’s labour market outcomes”. Her work “first compreh

RBI’s Monetary Policy

RBI’s Monetary Policy     Why in the News? The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) maintained the status quo on interest rates during its review meeting in October. The RBI prefers higher rates for longer periods for both domestic and external reasons: External factors include: Higher US inflation rates (they

India Steel

India Steel     Indian steel companies plan to raise prices of various grades of the alloy due to rising import costs of coking coal.  Australia accounts for over 50% of its coking coal imports of around 55-60 million metric tonne a year. India also meets its coking coal requirements by importing from Russia and the United States. India su

Open Market Operations (OMO)

Open Market Operations (OMO)     It refers to the purchase and sale of securities (treasury bills and government securities) in open market by the central bank of any country. This is done to regulate money supply in the economy. OMO is one of the most important ways of monetary control that is exercised by the central banks.  The central bank sells securit

India’s Banking sector

  Transformative reforms undertaken: Consolidation in the public sector banking space Emergence of private banks Specialised non-banking financial companies (NBFCs) Emerging fintech ecosystem have increased the diversity quotient of the financial sector and made it inclusive. The legacy issues of non-performing assets (NPAs) have been left behind by banks. Interna

Multilateral Development Banks (MDBs)

It is an international financial institution established by two or more countries for the purpose of encouraging economic development in poorer nations. It consists of member nations from both developed and developing countries. It intends to provide loans and grants to member nations to fund projects to support social and economic development in the areas of infrastructu

GST ON ONLINE GAMING & ITS IMPLICATIONS

UNIFORM 28% GST ON ONLINE GAMING & ITS IMPLICATIONS Why in the news? The GST Council has decided to levy a uniform 28% GST on Online gaming, casinos and horse-racing. What are the new changes? The 28% taxation will be applicable on the entire face value of the bet. This is a deviation from the earlier 18% GST on the platform value of the bet. Online gaming, Casinos and horse-r