TNPSCMOJO’S BUSINESS STANDARD BASED MCQ’S - 25/03/2019

This PDF Contains MCQ from Business Standard Newspaper 25/3/2019 for RBI Grade B
Phase 1 and Phase 2 . This Document will also be useful for SBI PO, SSC CGL, LIC AAO and
other exams

Issues to be read are

1. Onus of share transfer may shift from firms to govt

2. 3 Choices before wobbly NBFC’s

3. Rating the Raters: No Easy Solution

4. Centre to save Rs10600Crore on PM Kisan this fiscal year

5. FPO’s a hope for small farmer, institutional financing a worry

6. ‘Enemy Shares’ buybacks by CPSE get govt Rs11300Crore

7. Banks Continue to depend on Retail Loans for growth

8. The Overriding power of NBFC’s

9. Relief for Start-up’s

10. Squeezing PSU

11. Traders May go up on rupee

12. Need for Improved redress mechanism

Issue 1: Onus of share transfer may shift from firms to govt

1. What is the Issue? : Transfer of the Unclaimed shares

2. Who transfers the Unclaimed Shares? : Respective Companies Presently

3. What is Proposed? Ministry of corporate affairs has decided to take up transfer of shares
process

4. What does Unclaimed Shares mean?: Physical Shares Lost or Shares held by a dead Person

5. Present Procedure?: On Death of share holder the Legal Heir request the company to transfer
the shares to their names

6. Organization that is given this Job: IEPFA under Ministry of Corporate Affairs

7. IEPFA = Investor Education and Protection Fund Authority

Expected MCQ

The Transfer of unclaimed shares is done by

IEFPA

Respective Company

Respective Company in conjunction with the Bank of Claimant

Ans: Respective Company. IEFPA is going to take up this job

Issue 2: 3 Choices before wobbly NBFC’s

Following Idea’s stand important

There has been acute shortage of liquidity for NBFC’s

So these NBFC’s to enhance their base are left with two modes

2
1. To Get Converted as Banks

2. To Merge with Banking Entities

Ex: Capital First - IDFC Bank Merger

Less Liquidity --> Higher Cost of Funds --> Higher Rates of Interest --> Exposure to One
Sector such as Real Estate thus resulting in higher risk

Question A: Many NBFC are getting Merged with banks

R: Post IL and FS Cash crunch there is successive avalanche triggering less liquidity for
NBFC’s thereby exposing them to one large entity

Is R a Correct Reason of A?

Yes

Issue 3 : Rating the Raters: No Easy Solution

Important Take aways

1. Strengthening the Credit Rating Agency : Headed by Verrapa Molly

2. Long Term Capital borrowings of Companies : 25% is to obtained via Bond market

Decoding the Issue

We earlier witnessed the IL and FS Crisis which triggered to review the Credit Rating system in
India

It is proposed to rotate the CRA’s among different investors

That is a ARC reviewing the entity A will do it for some period and move to rate entity B and
entity A will reviewed by another CRA which cuts off the CRA-Entity Relation

But Govt has commented that this will lead to Short term Reviewing of ARC

3
Trade-off should be done between Period of Review of Entity vs the ARC Exposure that
particular ARC

Other Reform by SEBI is that Entities need to raise the Long Term via Bonds

Fund Raising =25% for long term funds --> Mandated by SEBI

With Respect to the CRA Framework Evaluation Committee recently to examine CRA’s
accountability

It was headed by Verappa Moilly

CRA’s shall be rating the entities in a rotation so that no Entity - CRA relationship builds up

25% of Long Term Bond Mandate is mandatory as per the Committee

Which is False?

Last point : 25% of Long Term Bond Mandate is mandatory as per the Committee is false

It was put forth by SEBI to deepen bond market

Issue 4: Centre to save Rs10600Crore on PM Kisan this fiscal year

1. What is the Issue? : Government announced Rs6000 support to farmers under PM Kisan .
Total Rs20000Crore allocation was done in budget of which Rs9400 Crore worth beneficiaries
have been registered for their 1st Installment amount of Rs2000. As Elections are scheduled in
April-May this year, Model code of conduct is in place from March 10. No more beneficiaries
will be added to scheme

2. What will happen to remaining Rs9400 Crore? : It will allocated to meet out the Fiscal
Deficit

Important Takeaways : Allotment Amount, Amount disbursed

The Amount that was disbursed before elections to per farmer under PM Kisan is ____

4
Rs1500

Rs2000

Rs6000

Ans: Rs2000

Issue 5: FPO’s a hope for small farmer, institutional financing a worry

These can split into two parts

FPO’s a hope for Small Farmer

1. What is FPO? --> A Group of Farmers with a professional management body to sell their
produce

2. Started in 2012: A separate proportion of allocation is done to FPO farmers under various
agriculture production related schemes such as MIDH, NFSM etc…

3. FPO’s are supported by : Small Farmers Agri-Business Consortium

4. Stat’s so far : There are 4000 FPO’s of which 2000 are backed by NABARD

5. Recent Reform: Tax waiver for FPO’s with Rs100Crore Turnover

How do FPO’s help in increasing the Farmer Income?

Main reasons are the

1 . Marketable Surplus (Due to Large Amount of Farmers Involved)

2 Professional Management to trade their produce (But they need the APMC Certificate to
market these good’s)

institutional financing a worry for FPO’s

5
Though they receive a budget support , bank’s don’t classify them under PSL

Issue 6: ‘Enemy Shares’ buybacks by CPSE get govt Rs11300Crore

1. What are “Enemy Shares”? --> The properties of Chinese and Pakistani who left their
properties in India with Custodian

Govt recently did several measures such as PFC-REC merger, Purchase of the Enemy shares by
CPSE to meet it’s disinvestment targets of Rs80000Crore

Government had set a target of Rs80000Crore for Disinvestment this year? Actual achieved is
around

Rs85000Crore

Rs90000Crore

Rs100000Crore

Ans: Rs85000Crore

Issue 7: Banks Continue to depend on Retail Loans for growth

As per RBI’s RECENT survey

Exposure to Retail Loans = That is Loan given for housing, consumer durables are still a bit
high when compared to the Industrial Credit exposure such as giving loans to institutional
entities etc..

||Above should not be misunderstood as amount exposure .

Exposure to a loan = No of Entities given loan under a category/Number of Entities that need a
loan under a category

But the Exposure to Institutional entities are steadily increasing

Issue 8: The Overriding power of NBFC’s

6
To understand this issue : You need to know what IBC is? Please refer our previous release

Premise is that : If we have two laws that are concerned with a issue, latter will take it’s
dominance

This happened to the case of Sec 71 of PMLA and Sec 238 of the IBC which deals with taking
possession of the assests of corporate debtor those subject to attachment under the PMLA

As per Sec 238 of IBC, Resolution professionals where able to take possession of debtor assets
those subject to attachment under the PMLA

Context: SREI Infrastructure vs Sterling Infra Case in NCLT Mumbai Bench

The Above will be sufficient from exam point of view.

Issue 9: Relief for Start-up’s

Differential voting rights : Already discussed in previous issues

Issue 10:Squeezing PSU

PSU have started back paying dividends in form of direct transfer, share buyback etc.. thus
easing India’s Fiscal Deficit for current Fy of 3.4%

But GST revenue has been less and will take Fiscal deficit to nearly 4%

Issue 11: Traders May go up on rupee

It explains how the USD-INR Swap is going to Banks or RBI based on FOREX Rates

Point to be understood is : How the Transmission of liquidity to the NBFC is going to happen
via the bond market

Please read for clarity . From Exam point of view, operation of swap and value of swap is
important

Issue 12: Need for Improved redress mechanism

7
Payment through the Wallets have increased tremendously , but the existing Payment and
Settlement Act 2007 couldn’t regulate to the expected level, thus leading in increased cases
being reported

Digital Ombudsman has been created by RBI and Stricter KYC Norms have been proposed

Amendments to PSS 2007 to get complied with the law system is underway

Proposed Point : Education of Customers to handle wallet transactions

SUMMARY OF ITEM

ISSUE CRUX

Onus of share transfer may shift from firms to Proposal of IEFPA to handle share transfers
govt

3 Choices before wobbly NBFC’s Liquidity vs Choice to get merged for NBFC
and exposure of NBFC to a single entity thus
exposing a higher risk

Rating the Raters: No Easy Solution Rotation of CRA’s and Limiting entity-CRA
exposure . Pro’s and Con’s

Centre to save Rs10600Crore on PM Kisan Payout of Rs9400Crore under PM Kisan -

this fiscal year Stoppage of adding beneficiary due to
elections - funds will be used to meet the
Fiscal Deficit

FPO’s a hope for small farmer, institutional FPO’s Pro vs Cons = Profitability vs PSL
financing a worry Coverage

NIL NIL

8
13. Banks Continue to depend on Retail Loans RBI’s survey found that Banks are
for growth concentrating much towards the Retail Loans

14. The Overriding power of NBFC’s IBC Act vs PMLA Act in Resolution process
for the debtor property attached with PMLA

15. Relief for Start-up’s Differential voting rights and Angel tax
evasion

16. Traders May go up on rupee The FOREX rate and transmission of liquidity

17. Need for Improved redress mechanism PSS Act 2007 amendments to meet out the
current standards to regulate the wallets

THANK YOU AND HAPPY LEARNING

You can write your review to tnpscmojo.rbigradeb@gmail.com