Banking, Financial and Economic Awareness

2019-12-13

 

1. Discrepancies found in DHS's audit report on IFIN

  • The gaps have been found by NFRA in DHS’s audit quality review report (AQR).
  • NFRA found that Deloitte Haskins and Sells (DHS) accepted explanations of the management and approved positive NoF and CRAR accounts of IFIN.
  • The management of IL&FS Financial Service (IFIN) did not disclose negative Net Owned Funds (NoF) and Capital to Risk Assets Ratio (CRAR) of IFIN as on March 31, 2018.
  • Negative NoF and CRAR accounts may cause termination of the company's NBFC license.
  • NFRA also found that the independence of auditors was also compromised as they provided non-audit services. Section 144 of the Companies Act, 2013 prohibits auditors from providing non-audit services.
  • NFRA may initiate disciplinary proceedings against under Section 132(4) of the Companies Act, 2013.
  • National Financial Reporting Authority (NFRA):
    • The government formed NFRA on 01st October 2018
    • It supervises the work of auditors, establishes and enforces standards of accounting and auditing.
    • Chairperson: Rangachari Sridharan
  • Infrastructure Leasing & Financial Services:
    • CEO: Arun K. Saha
    • Key subsidiaries: IL & FS Investment managers, IL & FS financial services (IFIN) and IL & FS Transportation Networks India Limited
    • Headquarters: Mumbai

2.  3.8 % decline in IIP and retail inflation stands at 5.54 %

  • Index of Industrial Production (IIP) for October 2019 declined by 3.8 %. In October 2018, IIP increased by 8.4 %.
  • All three components of IIP (manufacturing, mining and electricity) showed negative growth in October 2019.
  • Consumer Price Index (CPI) based inflation (retail inflation) for November 2019 stands at 5.54 %.
  • Retail inflation was 4.62 % in October 2019 and 2.33 % in November 2018.
  • Index of Industrial Production (IIP):
    • It is a measure of changes in industrial output over a period of time.
    • In IIP, Mining, Manufacturing and Electricity sectors carry weightage of 75.5%, 14.2% and 10.3% respectively.
    • Central Statistical Organization (CSO) compiles and publishes it on a monthly basis.

 

3. Government decides to sell its complete stake in Air India

  • Government will sell its 100% stake in Air India in order to revive it.
  • In 2018-19, Air India’s net provisional loss was estimated as Rs 8,556.35 crore.
  • It is having over Rs. 50,000 crore debt.
  • Reconstituted Air India Specific Alternative Mechanism (AISAM) has earlier approved re-initiation of Air India's strategic disinvestment.
  • Air India:
    • CEO: Pradeep Singh Kharola
    • Subsidiaries: Alliance Air, Air India Express

 

4. Change in dispute resolution committee of MNRE

  • Anil Swarup, who was part of MNRE’s dispute resolution committee, resigned from his post.
  • He has been replaced by PK Basu. Other members of the dispute resolution committee are MF Farooqui and AK Dubey.
  • In June 2019, MNRE announced its decision to form a committee to resolve disputes involving solar/wind power developers and NTPC/Solar Energy Corporation of India (SECI).

 

5. Bharat Bond ETF issued

  • Edelweiss Asset Management company has issued Bharat Bond ETF.
  • It aims to raise 3000 crore and 4000 crore as an initial amount.
  • The initial amount of 3000 crore will have a greenshoe or over-allotment option of 2000 crore in the 3 year maturity period (2023).
  • Initial amount of 4000 crore will have a green shoe or over-allotment option of 6000 crore in the 10-year maturity period (2030).
  • Greenshoe or over-allotment option during initial public offering (IPO) prevents a fall in share price below the issue price after issuing of shares.
  • Department of Investment and Public Asset Management has mandated Edelweiss AMC to design and manage Bharat Bond ETF.
  • Features of Bharat Bond Exchange Traded Fund (ETF):
    • First corporate Bond ETF of India
    • Small unit size of Rs 1,000, low cost of 0.0005 percent and exchange tradable.
    • Transparent Net Asset Value (NAV) and daily disclosure of the portfolio on the website (transparent portfolio).
    • Fixed maturity date

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