Banking Awareness of 26, 27 and 28 October 2022

Topic: Committees/Commissions/Taskforces

1. IRDAI has formed a committee to develop and suggest an affordable and comprehensive cover for the rural population.

• The committee has 24 members. It will be headed by Thomas M Devasia, Member (non-life) in IRDAI.
• The proposed cover will be a benefit based / parametric structure.
• IRDAI has also asked the committee to recommend a regulatory framework for the cover.
• The committee will also explore and recommend ways to bring about synergies in the working and operations of Bima Vahak, Bima Vistaar and Bima Sugam (the digital platform).
• Bima Vahak refers to a women-centric distribution channel. Bima Vistaar refers to a benefit-based/parametric structure.
• The committee will submit its report to the IRDAI by 11 November 2022.

Topic: Regulatory Bodies/Financial Institutions

2. IRDAI has placed restrictions on the operations of cross-border reinsurers (CBRs).

• IRDAI’s restrictions apply to over 300 CBRs which are active in the Indian reinsurance market.
• CBRs will now be required to retain a minimum 50% premium by way of premium deposit with the clients.
• The insurers will be responsible to maintain this premium in a separate designated account and to invest such amount into Government of India securities.
• As per IRDAI, maximum overall cession limits allowed per CBR will be 10% for CBRs with BBB rating.
• It will be 17.5% for rating BBB+ and up to A+ and 25% for rating above A+.
• IRDAI has reduced the capital requirements of foreign reinsurance branches (FRBs) in India from existing Rs 100 crore to Rs 50 crore.
• CBRs don’t have any offices in India. They register with the IRDAI to get business through brokers. They offer cheaper pricing than other reinsurers.

Topic: Banking System

3. Indian Bank has launched various digital initiatives under “Project WAVE”.

• SL Jain, MD and CEO, Indian Bank launched six digital initiatives.
• Indian Bank has partnered with Universal Sompo General Insurance for providing online two- and four-wheeler and health insurance through its mobile banking app IndOASIS.
• Indian Bank has partnered with Rupeek Capital Pvt Ltd, an asset-backed digital lending fintech platform. This has been done to offer jewel loans at customers’ doorsteps.
• It has extended Pre-Approved Personal Loan (PAPL) scheme to self-employed customers also.
• PAPL was launched in April 2022 for salaried customers and pensioners.
• The bank has now extended e-OD (Overdraft) facility against Term Deposits.

Topic: Corporates/Companies

4. $50 million raised by Northern Arc Capital through non-convertible debentures (NCDs) from FMO.

• Northern Arc Capital, a non-banking finance company (NBFC), has raised the amount through bond issuance to FMO, the Dutch entrepreneurial development bank.
• Chennai-based NBFC said it will use half the amount to fund MSMEs and women entrepreneurs.
• As per Northern Arc, the use of proceeds will address three critical UN Sustainable Development Goals (SDGs).
• These SDG are SDG8 (Decent Work and Economic Growth), SDG 5 (Gender Equality) and SDG 10 (Reduced Inequality).
• Non-Convertible Debentures (NCDs):
  • They are financial instruments that are not convertible into shares or equities. They are used for raising long-term funds.
  • In comparison to convertible debentures, NCDs provide higher returns.

Topic: Miscellaneous

5. Commonwealth Secretary-General Patricia Scotland has welcomed India’s offer to share its UPI technology with other member countries.

• As per the data released by the National Payments Corporation of India (NPCI), payment through Unified Payments Interface (UPI) crossed ₹11 lakh crore in September 2022.
• UPI is an instant real-time payment system. It facilitates inter-bank peer-to-peer (P2P) transactions.
• It was launched in 2016. It was developed by the National Payments Corporation of India (NPCI).
• National Payments Corporation of India (NPCI) was formed in 2008 by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). It is headquartered in Mumbai.

Topic: Indian Economy/Financial Market

6. First Supplementary Demand for Grants (SDG) is likely to include provisions for additional expenditure on food and fertiliser subsidy.

• This is likely to be in addition to provisions for re-capitalisation of public sector general insurance companies.
• Government will table first SDG for the fiscal year 2022-23 in the forthcoming winter session (November-December) of the Parliament.
• SDG is the statement of supplementary demands laid before the Parliament.
• It shows the estimated amount of further expenditure necessary for a financial year.
• This expenditure is over and above the expenditure authorized in the Annual Financial Statement for that year.
• SDG may be token, technical or substantive/cash. Token is a symbolic amount (₹1 lakh or so) to be allocated for any scheme.
• Technical refers to savings of a Ministry/Department to be used for a different purpose or for a scheme which requires more funds.
• Substantive/Cash means fresh fund allocation beyond what provided in the budget. This is to be met by the means of fresh withdrawal from Consolidated Fund of India.
• Finance Minister has already committed extra expenditure of ₹1.10 lakh crore for fertiliser subsidy. This is over the ₹1.05 lakh crore as announced in the budget.
• More funds are required for food subsidy as the extension of the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) for another three months (October 2022-December 2022) has been approved.
• As per IRDAI, insurance companies must maintain minimum solvency ratio of 1.5 to lower risks. In terms of solvency margin, the required value is 150 percent.
• The solvency margin is the extra capital that companies must keep over and above the claim amounts they may incur.
• Financial situation of public sector general insurance companies is not good.

Topic: Awards and Prizes

7. IIT Madras has received the National Intellectual Property Awards for 2021 and 2022.

• Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry has given out this award.
• At a function held in New Delhi on October 15, 2022, Shri. Piyush Goyal, Union Minister of Commerce and Industry, presented the award to Prof. V. Kamakoti, Director, IIT Madras.
• The award comprises a trophy, citation, and Rs 1 lakh.
• Patent Applications, Grants, and Commercialization are the key evaluative criteria for these awards.

Topic: Reports and Indices

8. India suffered income loss of 5.4% of GDP due to heatwave in 2021: Climate Transparency Report 2022

• India’s loss due to the heatwave is the highest among the G20 countries.
• As per the report, 142 million people in India may get exposed to heatwaves at 1.5 Degrees Celsius.
• Heatwaves in India reduced the yields of wheat crops.
• The 'Climate Transparency Report 2022' has been developed by experts from 16 partner organizations.
• The USA ranked first with a 25% contribution to the global emission, it is followed by the European Union with 22%.
• G20 countries are responsible for around three-quarters of global emissions.
• The report highlighted the link between the climate emergency and the energy crisis. The report will work as a reference tool for decision-makers.
• As per the report, the G-20 countries are still not taking the necessary action. India is only responsible for 3 percent of global emissions.

Topic: Miscellaneous

9. COP27 meeting to take place in Sharm-el-Sheikh, Egypt from 6th to 18th November.

• It will be the fifth time that a Climate Conference is being hosted in Africa.
• The first COP meeting was held in Berlin, Germany in March, 1995.
• The 'parties' of the COP are the governments that have signed the UN Framework Convention of Climate Change (UNFCCC) in 1994.
• Two more Indian Beaches have entered the list of blue beaches.
• These beaches are Minicoy Thundi Beach and Kadmat Beach. Both beaches are in Lakshadweep.
• India now has 12 Blue Flag beaches. Foundation for Environment Education (FEE) in Denmark accords the Blue Flag certification.

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