Banking, Financial and Economic Awareness
1. Government planning to establish Credit Enhancement fund
- The government is planning to establish a Credit Enhancement fund in order to increase investment in infrastructure projects having a rating less than AA.
- Credit Enhancement fund may be announced in the Union Budget 2020-21.
- The government, as well as companies in the private sector, will control and manage the Credit Enhancement fund. Credit Enhancement fund will be similar to the National Investment and Infrastructure Fund (NIIF).
- The fund will attract investors for putting in their money in lower-rated projects and improve the viability of lower-rated projects.
- Last month, the Finance Ministry has announced infrastructure projects worth Rs 102 lakh crore for implementation between the fiscal year 2020 and 2025.
- The contributions of the central government, states and private sector in these projects will be 39 %, 39 % and 22 %.
- Out of the total investment announced last month, nearly 70 % will go to sectors like energy (24 %), urban (16 %), railways (13 %) and roads (19 %).
- National Investment and Infrastructure Fund (NIIF):
- It was created in 2015.
- It is registered with SEBI as Category II Alternative Investment Fund (AIF).
- Government's contribution to NIIF is fixed at 49%.
- CEO: Sujoy Bose
2. Government planning to involve private sector in BharatNet scheme
- The government is planning to involve the private sector in BharatNet scheme in order to achieve the targets of the scheme under the Public-Private Partnership (PPP) model.
- NITI Aayog suggested the PPP model. But, the involvement of the private sector in BharatNet may cause a rise in prices of services under BharatNet.
- Currently, the government is offering free Wi-Fi services under BharatNet till March 2020.
- Under the PPP model, bidding will be circle wise and maximum contract duration may be fixed at 25 years. Private sector bidders should also provide on-demand connectivity with at least 50 Mbps speed to the minimum five development institutions in the allotted circle.
- National Optical Fibre Network (NOFN) was started in October 2011.
- In 2015, NOFN was renamed as BharatNet.
- In the first phase of BharatNet, one lakh gram panchayats were to be provided connectivity by March 2017.
- In the second phase of BharatNet, 2,50,500 gram panchayats were to be provided connectivity by December 2018.
- Third phase of BharatNet aims to create a futuristic network between districts and blocks and blocks and gram panchayats by 2023.
- Department of Telecommunications (DoT) is the nodal agency for implementing BharatNet.
- BharatNet is being funded by the Universal Service Obligation Fund (USOF).
3. Deadline for separating the post of chairman and managing director to be extended
- SEBI will extend the deadline for separating the post of chairman and managing director by listed companies from March 31, 2021 to March 31, 2022.
- The Committee on Corporate Governance had suggested that only a non-executive director should be appointed chairman. This would cause separation of the post of chairman and MD.
- The committee was set up on June 2, 2017 by SEBI. It gave its report on October 05, 2017.
- Uday Kotak was the chairman of the Committee on Corporate Governance.
4. Food processing industry's pre-Budget recommendations to Government
- The food processing industry has recommended the government to form model National Food Processing Policy, provide funding to food processing units outside food parks and extend the SAMPADA scheme benefits outside food parks.
- Currently, some states have separate food processing policies. Some states have merged food processing policy with industrial policy.
- In 2015, the Government had formed a special fund of ₹2,000 crores in National Bank for Agriculture and Rural Development (NABARD) and loans from this fund are currently given for food processing units in designated food parks only.
- The benefits of Pradhan Mantri Kisan SAMPADA Yojana (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) are also available to the food processing industry inside mega food parks.
- The Ministry of Food Processing Industries (MoFPI) is implementing PM Kisan SAMPADA Yojana. The scheme was approved in May 2017 and Rs. 6,000 crore was allotted for 2016-20.
- The industry has also recommended the government for deciding the Remission of Duties or Taxes on Export Products (RoDTEP) schemes rates 2 % more than the current MEIS (Merchandise Exports from India Scheme) rates.
5. DHFL General Insurance acquired by Sachin Bansal
- Flipkart founder, Sachin Bansal, has acquired DHFL General Insurance from Wadhawan Global Capital (WGC) for ₹100 crores.
- Navi Technologies has planned the acquisition of DHFL General Insurance.
- Navi Technologies was formed by Sachin Bansal and Ankit Agarwal. It was earlier known as BAC Acquisitions Private Limited (BACQ).
- In June 2019, Aadhar Housing Finance Limited was acquired by private equity funds managed by Blackstone, an investment firm.
- Aadhar Housing Finance Limited was owned by WGC. WGC also owns Dewan Housing Finance Ltd (DHFL).
- In September 2019, Sachin Bansal has also acquired a majority stake in NBFC Chaitanya Rural Intermediation Development Services (CRIDS) for ₹739 crores.
- He has also invested in Altico Capital India Ltd, IndoStar Capital Finance, Ola, Vogo, Bounce and Ather Energy.
6. IBBI suspends Mukesh Kumar Rathi
- For using IBBI in Universal Resource Locator (URL) of website, Insolvency and Bankruptcy Board of India (IBBI) has suspended Mukesh Kumar Rathi for three months.
- IBBI said that the use of IBBI in URL is misleading, and Rathi has not even qualified test for registration as a valuer.
- IBBI is a statutory body that supervises the working of registered valuers in India.
- The concept of registered valuer was used in section 247 of the Companies Act, 2013.
Multiple Choice Questions (MCQs)
1. The government will establish a Credit Enhancement fund to increase investment in which of the following sectors?
A. Health sector
B. Banking sector
E. None of the above
2. National Investment and Infrastructure fund has been categorised as ___________ Alternative Investment Fund.
A. Category I
B. Category II
C. Category III
D. Category IV
E. Category V
3. BharatNet project is being funded by which of the following?
A. Universal Service Obligation Fund
B. BharatNet Fund
C. National Optical Fiber Network Fund
D. Network Connectivity Fund
E. Telecommunication Assurance Fund
4. Who among the following was the chairman of the Committee on Corporate Governance that was set up in 2017?
A. Sachin Bansal
B. M. Narasimham
C. B Sivaraman
D. Uday Kotak
E. K Madhav Das
5. SAMPADA Scheme is associated with which of the following?
A. Banking Reforms
B. Recapitalization of Banks
C. Food Processing
D. Minimum income support for farmers
E. Public-Private Partnership
6. Which of the following companies has decided to acquire the DHFL General Insurance?
A. Chaitanya Rural Intermediation Development Services
B. Altico Capital India Ltd
D. Aadhar Housing Finance Limited
E. Navi Technologies