Banking, Financial and Economic Awareness

2020-08-03

1. SEBI seeks details of cash collaterals

  • SEBI has sought details of cash collaterals from clearing corporations associated with exchanges.
  • In cash collaterals, Rs 100 worth FDs are promised by private banks against Rs 50 actually deposited by a broker.
  • The banks call the FDs as funded bank guarantee and clearing corporations extended trading limits to brokers against FDs called by banks as funded bank guarantee.
  • Currently, FDs as collateral could only be form 25-50% of total margin of a broker. Total margin consists of liquid assets.
  • Recently, SEBI saw risk from non-funded FDs as collateral when crude oil prices in the commodity segment reached below Rs 1.  

2. Appointment of S.N. Rajeswari as CMD of Oriental Insurance

  • S.N. Rajeswari has been appointed as Chairman-cum-Managing Director (CMD) of Oriental Insurance.
  • The appointment has been made by Central government as Oriental Insurance Company Ltd is owned by Government of India.
  • She will serve as CMD till the end of May 2022.
  • Earlier, she has served as General Manager at New India Assurance Company Ltd.
  • Oriental Insurance is a general insurance company.
  • Recently, central government has given Rs 12,450 crore as capital to three state owned general insurance companies. The names of these companies are National Insurance Company, Oriental Insurance and United India Insurance.

3. Alpha Low Vol 30 ETF (Exchange Traded Fund) launched

  • Alpha Low Vol 30 ETF has been launched by ICICI Prudential Mutual Fund.
  • Alpha Low Vol 30 ETF is an open-ended index ETF. This means that Alpha Low Vol 30 ETF has been started as open-ended fund. It will track a portfolio of stocks in various sectors.
  • New Fund Offer (NFO) for Alpha Low Vol 30 ETF will open for 7 days from August 3 to 10.
  • Alpha Low Vol 30 ETF's units are expected to be listed on NSE and BSE.
  • The aim of Alpha Low Vol 30 ETF is to provide returns corresponding with Nifty Alpha Low-Volatility 30 Index.
  • Nifty Alpha Low-Volatility 30 Index comprises of 30 stocks. They are chosen from NIfty 100 and Nifty Midcap 50.

4. Navin Agarwal appointed as MD & CEO of Motilal Oswal AMC

  • Navin Agarwal has been appointed as MD & CEO of Motilal Oswal Asset Management Company (AMC).
  • The post was earlier held by Aashish Somaiyaa, who has resigned.
  • The name of Rajat Rajgarhia has been approved for appointment as full-time Director and Designated Director.
  • The approval was given at Board Meeting of Motilal Oswal Financial Services (MOFS).

5. IOCL's integrated paraxylene (PX) and purified terephthalic acid (PTA) plant in Paradip

  • Indian Oil Corporation Ltd (IOCL) will setup integrated paraxylene (PX) and purified terephthalic acid (PTA) plant in Paradip, Odisha.
  • The estimated investment for setting up of plant is Rs 13,805 crore.
  • The plant will be linked with and work in coordination with the refinery facility of IOCL.
  • The refinery facility is located in the port town of Jagatsinghpur district.  The plant will be completed by 2024.
  • The plant will be set up for helping textile sector. Polyester is produced from purified terephthalic acid (PTA) and PX is the raw material for production of PTA.

6. RBI may not cut repo rate

  • Due to negative returns for savers, RBI may not cut repo rate after the meeting of Monetary Policy Committee on August 4-6. 
  • Currently, bank deposits are getting negative returns or financial loss of about 1% due to lowering of one year fix deposit rate to 5.10% and increase in inflation to 6.09%.
  • Even though deposit rates have fallen, bank deposits have shown 10.8% rise.
  • RBI may keep repo rate unchanged as there is uncertainty over inflation during next few months.
  • In December 2019, inflation reached at 7.4% and deposits rate reached at 6.6%. At the same time, CPI inflation-adjusted deposit rate (real interest rate) became negative (-0.8%).

7. Applications received for production linked incentive (PLI) scheme

  • Ministry of Electronics and Information Technology (MeitY) has received applications from different companies for production linked incentive (PLI) scheme.
  • But, Chinese companies have not applied for the scheme. Global companies such as Samsung, Foxconn, Pegatron, Winston, and Rising Star have applied establishment of new plants or expansion of existing plants under the PLI scheme.
  • Various Indian companies have also applied for the scheme.  The names of Indian companies are Lava International, Dixon Technologies, Micromax Informatics, and Padget Electronics.
  • PLI scheme:
    • It was notified by government in April 2020.
    • Under the scheme, companies establishing new plants or expanding existing plants would get 4-6% incentive on incremental sale of India made goods.
    • The scheme would be available for 5 years.
    • Under this scheme, government has set up minimum retail invoice price per unit for international mobile handset manufacturing companies.
    • Government has not set up minimum retail invoice price per unit for Indian companies.

8. Eight core industries' output contracts for fourth consecutive month

  • Eight core industries' output has contracted for fourth consecutive month.
  • In June, the output of eight core infrastructure industries has contracted by 15%.
  • The main reason for contraction of output is decline in the production of coal, crude oil, natural gas, steel, cement and electricity.
  • In May 2020, output of eight core sector contracted by 22%. In June 2019, eight core sectors have seen expansion by 1.2%.
  • The weightage of eight core industries in Index of Industrial Production (IIP) is 40.27%.

 

 

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