Current Affairs Update – 5 October, 2017


Hello and welcome to exampundit. Here are the Important Current Affairs of 5 October, 2017. These are very important for the upcoming IBPS PO, IBPS RRB, OICL AO, UIIC Assistant & NICL Assistant Exams.



Banking & Financial News

RBI's Janak Raj panel suggests linking bank lending rates to a market benchmark


  • A committee set up by the Reserve Bank of India (RBI) on Wednesday recommended linking bank lending rates to a market benchmark, in a bid to hasten monetary policy transmission as well improve transparency in rate setting by lenders.
  • The panel—headed by Janak Raj, principal adviser, monetary policy department—recommended that all floating rate loans advanced from April could be referenced to one of three external benchmarks.
  • The panel has suggested a risk-free curve involving rates on treasury bills, or certificate of deposits rates or the central bank’s policy repo rate.
  • RBI will take a final view on suggestions of the panel after taking into account public feedback received until 25 October.
  • The panel pulled up banks for “arbitrariness” in calculating the base rate and marginal cost of funds-linked lending rates (MCLR), two existing benchmarks to which retail lending rates such as car loan and home loan rates are fixed. The spreads charged over these internal benchmarks “has undermined the integrity of the interest rate setting process”, it said.
  • The panel suggested that lending rates should be reset once every quarter, from the current practice of once a year.

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RBI issues directions for peer-to-peer lending platforms


  • The Reserve Bank of India (RBI), on October 4, issued directions for non-banking financial companies (NBFC) that operate peer-to-peer (P2P) lending platforms. According to the directions, from now on no NBFC can start or carry on the business of a P2P lending platform without obtaining a Certificate of Registration. Every company seeking registration with the bank as an NBFC-P2P shall have a net owned funds of not less than Rs 20 million or such higher amount as the bank may specify.
  • There is good news for existing NBFC-P2Ps as well as because there are few players already in the market. They have been asked to apply for registration as NBFC-P2Ps within 3 months.
  • These directions issued by RBI will be known as the Non-Banking Financial Company - Peer to Peer Lending Platform (Reserve Bank) Directions, 2017, and will come into force with immediate effect.
  • P2P lending is a form of crowd-funding used to raise loans which are paid back with interest by bringing together people who need to borrow, from those who want to invest. It can be defined as the use of an online platform that matches lenders with borrowers to provide unsecured loans. The borrower can either be an individual or a legal person requiring a loan. The interest rate may be set by the platform or mutual agreement between the borrower and lender.

Scope of activities of NBFC-P2P
Among several other things, an NBFC-P2P can:

  • Act as an intermediary providing an online marketplace or platform to participants involved in P2P lending.
  • Not raise deposits as defined by or under Section 45I(bb) of the Act or the Companies Act, 2013.
  • Not lend on its own.
  • Not hold, on its own balance sheet, funds received from lenders for lending, or funds received from borrowers for servicing loans; or such funds as stipulated in paragraph 9.
  • Not cross-sell products except for loan-specific insurance products.
  • Not permit international flow of funds.

An NBFC-P2P will be expected to:

  • Undertake due diligence on the participants.
  • Undertake credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders.
  • Undertake documentation of loan agreements and other related documents.
  • Provide assistance in disbursement and repayments of loan amount.
  • Render services for recovery of loans originated on the platform.

Prudential norms

  • The aggregate exposure of a lender to all borrowers at any point of time, across all P2Ps, shall be subject to a cap of Rs 10 lakh.
  • The aggregate loans taken by a borrower at any point of time, across all P2Ps, shall be subject to a cap of Rs 10 lakh.
  • The exposure of a single lender to the same borrower, across all P2Ps, shall not exceed Rs 50,000.
  • The maturity of the loans shall not exceed 36 months.

Fund transfer mechanism

  • Fund transfer between participants on the P2P lending platform will happen through escrow account mechanisms. All fund transfers shall be through and from bank accounts, and cash transactions are strictly prohibited.
  • Earlier, the RBI had issued a discussion paper on regulation of the P2P lending platform as a non-banking finance company (NBFC). Thereafter, the P2P platform has been notified as an NBFC under section 45I (f) (iii) of the Reserve Bank of India Act, 1934 as per the gazette notification published on September 18, 2017.

Mastercard, Andhra Pradesh Ink Strategic MoU To Digitally Transform State As A “Fintech Valley”


  • Global payments company Mastercard plans to invest another $750 million-odd in India by 2020 to fuel its growth in the world’s second-fastest growing large economy.
  • This money will be used for organic growth and acquisitions, and in activities such as cybersecurity, mobile and digital payments, smart cities and wallets, said Ajaypal S Banga, President and CEO, Mastercard said here on Thursday.
  • The planned investment of about $750 million comes on top of the $550 million that Mastercard invested in India over the last three years.
  • About 14 per cent of Mastercard’s global employee base of 15,000 is based in India and most of them are technologists developing mobile technology and cyber security solutions. “There are also a bunch of people doing data analytics and advanced data analytics,” he said. As on date, Mastercard has offices in Vadodara, Gurugram and Pune.
  • Mastercard has been using the acquisition route to grow its business in India. This includes the 2014 buy of software solutions and payments management firm ElectraCard Services (ECS).
  • On Thursday, Mastercard signed a Memorandum of Understanding (MoU) with Andhra Pradesh to digitally transform the State’s delivery of services to people, especially farmers, and drive financial inclusion.
  • The MoU, which will be valid for two years, was signed between Andhra Pradesh Chief Minister N Chandrababu Naidu and Mastercard’s Banga. The MoU will help Andhra Pradesh create a “fintech valley” of global repute at Vizag, Naidu told reporters here.

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Gujarat first state to slash VAT on fuel prices


  • Ahead of the state assembly elections, the state government has cut value-added tax (VAT) on petrol and diesel, making it the first state to follow the Centre's directions to do so.
  • Speaking at an event in Una as part of the 'Gaurav Yatra', Gujarat chief minister Vijay Rupani said that the government was set to reduce taxes on the retail fuel. Gujarat government is likely to make an announcement soon.
  • Recently, the union government cut basic excise duty on petrol and diesel by Rs 2 a litre.
  • Union oil minister Dharmendra Pradhan had recently stated that retail fuel prices were set to ease out, following which the Centre asked state governments to cut VAT on petrol and diesel to ease rates.

India's renewable energy capacity to double by 2022: IEA


  • India’s renewable energy capacity will be more than double by 2022, according to the latest renewables market analysis and forecast report by the International Energy Agency (IEA).
  • The increase, according to the report, would be enough for India to overtake renewable expansion in the European Union for the first time ever.
  • The country’s renewable energy installed capacity is 58.30 GW as per the recent government data. The government has an ambitious target of raising it to 175 GW by 2022 including 100 GW of solar and 60 GW of wind energy.
  • IEA stated in its report that the solar PV and wind together represent 90 per cent of India’s capacity growth as auctions yielded some of the world’s lowest prices for both technologies.

Bangladesh signs USD 4.5 billion loan deal with India


  • Bangladesh on 4 October 2017 signed a massive USD 4.5 billion third line of credit (LoC) agreement with India for its social sector development and infrastructure with Finance Minister Arun Jaitley vowing to back the country’s developmental initiatives.
  • The accord was signed in the presence of India’s Finance Minister Jaitley and his Bangladeshi counterpart A M A Muhith after the two leaders held talks.
  • The USD 4.5bn LoC was announced during Prime Minister Sheikh Hasinas visit to India in April.

News related to India and states

Center to organise Paryatan Parv across the country to promote tourism


  • The Union Ministry of Tourism would be organising Paryatan Parv, a festival of tourism, from 5 October 2017 in collaboration with other central ministries, state governments and stakeholders.
  • The main objective behind organising the festival is to draw focus on the benefits of tourism and showcase the cultural diversity of the country and to reinforce the principle of ‘Tourism for All’.
  • The 20-day festival would be beginning at Humayun's Tomb in Delhi. It will end on 25 October.
The festival will have three main components:

  • Dekho Apna Desh
  • Tourism for All
  • Tourism & Governance
The components aim to encourage Indians to visit their own country by holding tourism events at sites across all states and interactive Sessions and workshops with stakeholders on varied themes.

Appointments

ICMR Chief Soumya Swaminathan appointed WHO Deputy Director-General


  • Soumya Swaminathan, director general of Indian Council of Medical Research (ICMR), appointed deputy director-general, of World Health Organization (WHO), in Geneva.
  • This position is the second-highest at the UN’s health agency. The position is also the highest post held by any Indian in the WHO.
  • This new leadership team in WHO was announced by Dr. Tedros Adhanom Ghebreyesus, the director-general, who was elected to the post in May 2017.
  • The second appointment along with Dr. Swaminathan was Jane Ellison, who was Special Parliamentary Adviser to the UK’s Chancellor of the Exchequer, has been appointed as a Deputy Director General for Corporate Operations (DDC), whereas Dr. Swaminathan has been appointed as Deputy Director General for Programmes.

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