1. RBI raises the minimum net owned fund requirement for Asset Reconstruction Company to Rs 300 crore
Tags: Economy/Finance
The Reserve Bank of India (RBI) has raised the minimum net owned fund (NOF) requirement of the existing Asset Reconstruction Company (ARC) to Rs 300 crore from the present Rs 100 crore by March 2026.
The NOF for the newly set up ARC will be Rs 300 crore but for the existing ARC, the new NOF requirement is to be achieved phase wise.
The existing ARC will have to increase their NOF to Rs 200 crore by 31st March 2024 and to Rs 300 crore by 31st March 2026.
In a circular issued on 11 October RBI said that it has taken this step on the recommendation of the Sudarshan Sen committee that was set up by the RBI in 2021 to review the functioning of the ARC.
Asset Reconstruction Company
Asset Reconstruction Company is a financial company which are set up under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
They are registered as NBFC (Non-Banking Financial Company)
They are regulated by the RBI.
ARC specializes in loan recovery which has turned into Non-Performing Assets (NPA).
ARC buys these loans from the banks at a discount and then recovers the loan amounts from the defaulting borrower. However they should not be confused with loan recovery agents employed by banks, which often use illegal loan recovery methods.
NPA are those loans where the borrower fails to repay either the principal amount or the interest amount or both on the loans taken from banks and financial institutions for the 90 consecutive days .(However agricultural loans and unsecured loans are do not comes under SARFAESI Act)
ARCIL (Asset Reconstruction Company of India Limited), was the first ARC to be set up in India in 2022.
Governor of RBI: Shaktikanta Das
2. 3 Indian factories join WEF’s Global Lighthouse
Tags: Economy/Finance
Three Indian factories are amongst the 11 factories and industrial sites worldwide which have been added to the World Economic Forum’s (WEF) Global Lighthouse Network. WEF announced the inclusion of Pharmaceuticals company Cipla’s Indore factory, Dr Reddy’s Laboratories’ Hyderabad factory and the FMCG Company Mondelez factory in Sri City (Andhra Pradesh) on11 October 2022.
The Global Lighthouse Network is a community of over 100 manufacturers that are showing leadership in applying Fourth Industrial Revolution technologies such as artificial intelligence, 3D-printing and big data analytics.
Incorporating advanced digital production (ADP) technologies into industrial production processes has given rise to the concept of Industry 4.0, also known as the Smart Factory.
In the 4IR, computers are connected and communicate with one another to ultimately make decisions without human involvement.
Sustainability Lighthouse by the World Economic Forum (WEF).
Hindustan Unilever Limited (HUL) Dapada factory, which manufactures home care products including Surf Excel, Rin, and Vim, has been recognised as a Sustainability Lighthouse by the World Economic Forum (WEF).
This is the first Unilever site and the first company across sectors to achieve this status in India. This recognition comes on the back of the unit being accorded the designation of an advanced Fourth Industrial Revolution (4IR) Lighthouse earlier this year.
The unit has been recognised for its use of innovative solutions, specifically the use of machine learning and integrated energy management systems to reduce energy, water and material waste.
Fourth Industrial revolution
The Fourth Industrial Revolution (4IR) is a term coined in 2016 by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.
Incorporating advanced digital production (ADP) technologies into industrial production processes has given rise to the concept of Industry 4.0, also known as the Smart Factory.
In the 4IR, computers are connected and communicate with one another to ultimately make decisions without human involvement.
World Economic Forum Headquarters : Geneva, Switzerland.
3. SEBI approves HSBC acquisition of L&T Investment Management’s Mutual Fund business
Tags: Economy/Finance
The Capital market regulator Securities Exchange Board of India (SEBI) approved the acquisition of the L&T Investment Management by the HSBC Asset Management (India) on 11 October 2022.
In December 2021 , HSBC Asset Management announced the deal to acquire 100% stake in the L&T Investment Management , a wholly owned subsidiary of the L&T Finance Holding for $425 million (about ₹3,187 crore) . L&T Investment Management manages the mutual fund business of L&T.
HSBC Asset Management (India) is a subsidiary of the HSBC Holding Company (United Kingdom) and manages its mutual fund and other wealth management business in India.
Now L&T Mutual fund business will be merged with the HSBC mutual fund business.
Mutual Funds are launched by an Asset Management Company. Mutual Fund pools the savings of the public and invest in the capital market or money market.
HSBC
It was earlier called Hong Kong and Shanghai Banking Corporation.
It is a British bank which was set up in 1865 in Hong Kong.
However the headquarters of HSBC is in London, Britain.
It is registered as a Foreign Bank in India with its headquarters in Mumbai.
Chief Executive Officer of HSBC India Operation: Hitendra Dave
Tagline of HSBC Bank: The world’s local bank
4. Indian Railways plans to replace fossil fuel fleet with electric fleet by 2025
Tags: National Economy/Finance Science and Technology
In a big boost to the Centre’s ambitious plan to make India a 100% electric vehicle nation by 2030, the Indian Railways has proposed to replace its entire fleet of vehicles that run on diesel, biofuels or even natural gas with electric vehicles by December 2025.
To achieve the ambitious target of 2030 the country needs to set up 46,000 EV charging stations by 2030 to match the global benchmark.
Phase wise target of Railways
According to the timeline proposed by the railways, it aims to achieve the target of installing EV-charging stations and phasing out 20% of its fleet by December 2023, 60% by 2024 and 100% by 2025.
The replacement of inspection vehicles in divisional offices and attached units would not be mandatory in the initial phase of three years since the vehicles would be required by officials for frequent visits to far-flung areas where adequate charging infrastructure may not be available.
The railways will also create an affordable and accessible charging infrastructure for users, including passengers, visitors and the general public, on its premises.
5. Ananth Narayan Gopalakrishnan assumes charge as whole-time member at SEBI
Tags: Economy/Finance Person in news
Former banker Ananth Narayan Gopalakrishnan took charge as the fourth whole time member (WTM) in the Securities and Exchange Board of India (SEBI) on 10 October.
Important facts
Narayan, who was a member of various advisory committees of SEBI and RBI, has been appointed for the initial three years.
Prior to taking over, Narayan was Associate Professor at the SP Jain Institute of Management and Research.
He has over two and a half decades of experience in banking and financial markets, during which he held the position of Regional Head of Financial Markets for ASEAN and South Asia at Standard Chartered Bank.
He has expertise in foreign exchange, interest rates, derivatives and debt capital markets.
Narayan has also worked with Deutsche Bank and Citibank.
Narayan has been given the Department of Market Intermediaries Regulation and Supervision (MIRSD), Department of Alternative Investment Funds and Foreign Portfolio Investors (AFD), Department of Integrated Monitoring (ISD), Department of Economic and Policy Analysis (DEPA) and Department of Information Technology (ITD) in SEBI.
Securities Exchange Board of India (SEBI) Chairperson - Madhabi Puri Buch
6. IMF cuts India's growth rate to 6.8% for 2022 , India will still remain the fastest growing major economy in the world
Tags: Economy/Finance
The International Monetary Fund (IMF) in its annual World Economic Outlook released on 11 October 2022 has cut the expected growth rate of India to 6.8% in 2022, but still it will be the fastest growing major economy in the world. In July 2022, the IMF had said that India would grow at 7.4% in the present fiscal. IMF is the latest international agency which has cut the Indian growth rate. IMF expects the Indian economy to grow by 6.1% in 2023.
However, the IMF still expects the Indian economic growth to be highest amongst the major economies in the world ahead of China (4.4%), Saudi Arabia (3.7%), and Nigeria (3%).
World Economic Growth prospects
According to the IMF the world economy is likely to grow by 3.2 % in 2022 with the United State economy expected to grow by 1.6%.
The IMF said global GDP growth in 2023 will slow to 2.7%, as higher interest rates slow the U.S. economy, Europe struggles with spiking gas prices and China contends with continued COVID-19 lockdowns and a weakening property sector.
The three largest economies, the United States, China and the euro area will continue to stall," IMF chief economist Pierre-Olivier Gourinchas said in a statement. "In short, the worst is yet to come, and for many people, 2023 will feel like a recession."
IMF World Bank annual meeting 2022
The report was released on the eve of the Annual meeting of the IMF and World Bank which is going to be held in Washington D.C from 10 -16 October 2022.
This is the first in person meeting to be held after the three years due to covid related restriction.
Indian Finance Minister Nirmala Sitharaman is leading the Indian delegation to the meeting.
International Monetary Fund
- It is an International financial institution which was set up after the Bretton Woods conference held in the United States from July 1 to 22, 1944.
- It was set up in July 1944.
- It was set up to provide loans to the member countries which were facing a balance of payment crisis.
- A country which is a member of the IMF automatically becomes a member of the World Bank.
Total member of IMF: 189
Headquarters: Washington D. C, United States of America
Managing Director: Kristalina Georgieva
Accounting Unit of IMF: Special Drawing Rights (SDR)
7. ‘Smart Wire’ launched by ICICI Bank for faster SWIFT-based inward remittances
Tags: Economy/Finance
India’s 2nd largest private bank ICICI Bank has launched Smart Wire, for its customers to help them with SWIFT-based inward remittances in a faster and hassle-free manner.
ICICI Bank, which is the first bank in the country to launch such a service, said that the Smart Wire facility will allow both Non Resident Indians (NRIs) and resident customers to undertake inward remittance transactions in an online and paperless way.
Wire transfer is an electronic way to transfer the money from one bank to another or a financial service provider. The funds are transferred through SWIFT or Society for Worldwide Interbank Financial Telecommunication network.
Inward Remittance: Remittance means transfer of funds from one place to another. Inward remittance means that a person who is living outside India sends money to India.
SWIFT was set up in 1973 with its headquarters in La Hulpe, Belgium and it became live in 1977. It is a messaging system which provides instant communication between the networked member banks for cross border international fund transfer. The communication is secured and standardized.
At present it is present in all the continents with 200 plus countries and territories and more than 10,500 institutions as its client.
ICICI Bank
Managing Director and Chief Executive Officer: Sandeep Bakshi
Headquarters : Vadodara ,Gujarat
8. India to surpass US to have the second largest online shopper base by 2024
Tags: Economy/Finance
According to a report ‘How India shop online 2022 ‘published by the American consultancy firm Bain and Co. and Flipkart, India is likely to overtake the United States within 1-2 year and will have the second largest online shopper base in the world after China .
India currently has the third-largest shopper base globally, with 180–190 million online shoppers in 2021 after China and the United States and it is likely to grow to 400–450 million by 2027.
According to the report, the Indian e-retail market rose to approximately $40 billion in 2021 and is slated to reach $50 billion in 2022.
It expects India’s e-retail market to increase to $150–$170 billion by 2027. This implies 25%–30% annual growth and doubling of market penetration to 9%–10% over the next five years.
The report defines ‘e-retail’ as purchase of products online and does not include services, games and entertainment.
The report expects a growth rate of 25–30% annual growth in the next five years.
The report says that fashion, beauty, and grocery or general merchandise, including personal care, will replace mobiles, electronics and large appliances as the leading categories by 2027.
9. National Workshop on 'Ease of Doing Business' organized by DPIIT
Tags: Economy/Finance
The National Workshop on 'Ease of Doing Business' was organised by the Department for Promotion of Industry and Internal Trade (DPIIT) in New Delhi on 8 October 2022. Parameswaran Iyer, CEO, NITI Aayog addressed the workshop.
Important Facts:
Meanwhile, G20 Sherpa Amitabh Kant emphasised the role of ease of doing business in transforming India.
It is also necessary to bring about a change in the mindset within the country to accept the new methods.
Ramesh Abhishek, former secretary at DPIIT, outlined the vision of Ease of Doing Business 2.0, which would create a framework for all public authorities, including states and regulators.
Ajay Tirkey, Secretary, Department of Land Resources said that there has been a significant improvement in the registration processes through digitization and accessible grievance redressal mechanism.
The department is working on the next phase of reforms including geo-referencing and unique identification for land parcels.
About Department for Promotion of Industry and Internal Trade (DPIIT)
In the year 2019, the Department of Industrial Policy and Promotion (DIPP) was renamed as Department for Promotion of Industry and Internal Trade (DPIIT).
It is administered by the Ministry of Commerce and Industry.
It is a nodal government agency to formulate and implement development strategies for the industrial sector, along with other socio-economic objectives and national priorities.
10. NMDC Signs MoU with RailTel for ICT and Digital Solutions
Tags: Economy/Finance National News
Mining major National Mineral Development Corporation (NMDC) and RailTel Corporation of India signed a Memorandum of Understanding on 10 October covering NMDC's ICT and Digital Transformation services at their corporate offices and mining premises.
Important facts
This partnership will focus on optimum utilization of resources and will pave the way for a robust digital transformation in the mining sector.
As India’s leading miner, NMDC has been an early user of automation and digitalization.
RailTel will provide consultancy, project management and execution services which will enhance efficiency and transparency.
This is a big step towards retaining NMDC in the top league.
This Memorandum of Understanding (MoU) builds on NMDC's already existing partnership with National Railway Telecom.
Under this, MPLS VPN at 11 locations of NMDC and Internet Leased Lines (ILL) at 7 locations of NMDC and High-Definition Video Conferencing solutions are being provided for the last 7 years.
