Banking, Financial and Economic Awareness of 11, 12 and 13 November 2020

1. IFSCA approved International Financial Services Centres Authority (Banking) Regulations 2020.

• International Financial Services Centres Authority (IFSCA) has approved draft banking regulations for banking operations at IFSCs.
• It will lay down the rules for the banking operations permissible at the IFSC.
• The draft regulations will enable the authority to decide on other permissible activities such as credit enhancement, credit insurance, and sale, purchase of portfolios, etc.
• It will allow opening of a foreign currency account by the persons residing outside India.
• It will also create a framework to regulate the business conducted by the IFSC banking units in INR with Indian residents and persons residing outside India.
• International Financial Services Centres Authority:
  • It was established to regulate all financial services in International Financial Services Centres (IFSCs).
  • It is headquartered at Gandhinagar in Gujarat.
  • India’s first International Financial Service Centre (IFSC) was established at the Gujarat International Financial Tec (GIFT) City, Ahmedabad.
  • IFSC caters the customers outside the jurisdiction of the domestic economy.

2. 15^th Finance Commission submitted its report for FY 2021-22 to 2025-26.

• The 15^th Finance Commission led by N.K Singh has submitted its final report for the financial years 2021-22 to 2025-26 to the President. The report is titled ‘Finance Commission in Covid Times’.
• The Finance Commission recommended the devolution of funds between the center and state for 2021-22 to 2025-26.
• The 15^th Finance Commission has recommended in its interim report for the FY 2021 that states will be given 41% of all taxes.
• The commission recommended on vertical and horizontal tax devolution, local government grants and also looked at the matter of performance incentives for states and a special financial mechanism for defence and internal security, etc.
• The report will be tabled in Parliament.
• 15^th Finance Commission:
  • The 15^th Finance Commission was constituted on 27 November 2017.
  • The commission had already submitted its report for the financial year 2020-21 on 5 December 2019.
  • Nand Kishore Singh (N. K. Singh) is the chairman of the Fifteenth Finance Commission.
  • Ajay Narayan Jha, Prof. Anoop Singh, Dr. Ashok Lahiri and Dr. Ramesh Chand are its four other members.
  • Criteria for devolution of fund for 2020-21 by 15^th Finance Commission:
    • Income distance
    • Population
    • Demographic performance
    • Forest and ecology
    • Tax effort

3. Union Cabinet approves Production Linked Incentive scheme worth 1.46 lakh crore

• Production-Linked Incentive (PLI) scheme has been approved by the Union Cabinet for Enhancing India’s Manufacturing Capabilities and Exports in 10 key sectors.
• The PLI scheme has identified 10 key sectors in which it will make Indian manufacturers at par with global competition, attract investment, support cutting-edge technology, enhance exports and will make India an integral part of the global supply chain.
• It will stimulate the Vision of ‘AatmaNirbhar Bharat’ and create new job opportunities in various sectors.
• Under this scheme, Automobiles and Auto Components sector have received the maximum incentive. 
• Key points about the sectors identified:
  • The Indian pharmaceutical industry contributes 3.5% of the total drugs and medicines exported globally. It is the third-largest in the world by volume and 14^th largest in terms of value. PLI scheme will incentivize the global and domestic companies in the value production.
  • India is the world’s second-largest steel producer in the world. It is a net exporter of finished steel. PLI scheme will help in increasing manufacturing capabilities of the steel industry.
  • PLI scheme will help in the domestic manufacturing of white goods, Solar PV panels, electronic products, etc.

4. Indian Economy may enter technical recession for the first time in history

• Indian Economy may enter the technical recession for the first time in history at the end of second quarter of 2020-21.
• RBI has released an article titled as State of the Economy. The article is a part of RBI’s monthly bulletin for November 2020.
• The article mentions a 23.9% decline in GDP in the first quarter of 2020-21 and says that its nowcasting assessment suggests ease in the speed of GDP contraction to 8.6% in the second quarter of 2020-21. 
• State of the economy article published by RBI in its monthly bulletin says that the situation for July-September quarter will be known after National Statistical Office (NSO) estimates will be released at the end of November 2020.
• RBI has said that economic growth will be positive in October-December quarter of 2020-21 and economic data for October 2020 is showing brightened prospects as well as making consumer and business confidence strong.   
• The article mentions unrelenting inflation, risks to the global economy from the second wave of COVID-19 and stress intensifying among households and corporations as three major downside risks.   
• Recession is technically defined as a negative GDP growth rate for two consecutive quarters or more. Nowcasting means prediction for the present or very near future.

5. Government imposes 5% BCD on components of open cells for LED and LCD TVs

• Government has imposed 5% Basic Customs Duty (BCD) on components of open cells for LED and LCD TVs.
• The chip on film, printed circuit board assembly (PCBA) and cell (glass board/substrata) are the components of open cells. Government has imposed 5% BCD on these cells.
• Earlier, government has taken decision that 5% duty will be re-imposed on open cell TV panel imports.
• Government has removed 5% customs duty on open cell TV panel imports and open cell components in 2019.
• Basic Customs Duty (BCD) is a type of import duty. It is based on the value of imported goods.

6. Cotton crop in Maharashtra’s Vidarbha faces attack by Grey mildew

• Cotton crops in Maharashtra’s Vidarbha region are facing attack by Grey mildew, a fungal disease.
• The crops were already facing pink bollworm (PBW) attack and boll rot.
• As per the State Agriculture Department, nearly 50% of crop is being affected by pathogen attacks.
• Boll rot and grey mildew are more dangerous than pink bollworm (PBW).
• The fungal attacks are increasing due to changing weather pattern and very heavy rainfall in September and October.
• The fungus looks like sprinkled curd on the leaves and is commonly known as dahiya in Maharashtra.

7. FM tells banks to ensure linking of all accounts with Aadhaar numbers by March 31, 2021

• During her address to 73^rd annual general meeting of the Indian Banks’ Association (IBA), FM has told banks to ensure linking of all accounts with Aadhaar numbers by March 31, 2021.
• She has also told banks to promote digital payment methods, discourage non-digital payments and adopt UPI payments.
• She also asked PSU banks to promote the RuPay card over the other cards.
• Indian Banks’ Association (IBA) was formed in September 1946. It is headquartered in Mumbai. Its CEO is Sunil Mehta. It has 247 members.
• It is an association of banks and other entities in India’s banking ecosystem. It is not a government entity or a regulatory authority.
• India’s public sector banks, private sector banks, foreign banks having offices in India, co-operative banks, regional rural banks and all Indian financial institutions are members of IBA.
• Rajkiran Rai G, MD and CEO of Union Bank of India, was elected as chairman of managing committee of IBA in October 2020.

8. IBA and bank unions conclude 11th bipartite wage negotiations.

• Indian Banks’ Association (IBA) and bank unions have concluded 11^th bipartite wage negotiations.
• The negotiations will come into effect from 1 November 2017 and a 15% wage hike will be given to more than eight lakh employees from 29 banks.
• The wage agreement will continue from November 2017 to October 2022. No decision has been taken on a five-day week for bank employees.
• Two sides also agreed to introduce Performance Linked Pay for the first time from current fiscal. It will be as per the bank’s operating profit/net profit and optional for private and foreign banks.
• IBA signed a bipartite settlement note with the United Forum of Bank Unions (UFBU). UFBU represents four workmen unions and four officers associations.
• It also represents Bank Karamchari Sena Mahasangh (BKSM). All of them were parties to the agreement.
• Previous wage settlement was signed in May 2015 for the period from November 2012- October 2017.

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