Banking and Financial News – 22 May 2014

RBI eases gold norms (Reuters) - Reserve Bank of India (RBI) allowed banks to provide gold loans to jewellery companies, while also expanding the number of private agencies (Star Trading Houses & Premier Trading Houses) that can import the precious metal. The moves by the RBI, announced late on Wednesday, should increase supplies of gold and brighten the earnings outlook for jewellery makers after the government took tough measures to curb imports last year, analysts said. Although the two steps alone are not expected to impact India's current account deficit, they could reinforce expectations that RBI and finance ministry officials will soon move towards removing some of those curbs.

RBI allows banks to provide long-term credit to exporters. (The Hindu) - RBI has allowed banks to provide long-term credit up to 10 years to exporters to enable them to enter into long term supply contracts with importers abroad.

All new ATMs should be disabled-friendly. (The Hindu) – RBI, for the benefit of disabled persons, has made it mandatory for banks to install from July 1, 2014, only talking ATMs with Braille keypads. RBI further advised banks to convert existing ATMs to ones with these features and to provide ramps at all existing and future ATMs, as well as bank branches, where feasible.

SEBI ups cash investment limit in Mutual Funds (Business Standard) – To boost investor participation into mutual funds from smaller centres, Securities and Exchange Board of India (SEBI) has allowed cash investment up to Rs.50,000 (Earlier limit was Rs.20,000)

Important Financial Terms in the News explained.

Star Trading Houses & Premier Trading Houses – Merchant as well as Manufacturer Exporters, Service Providers etc. are eligible for the status depending on total annual exports.

• Export House (EH) - Rs.20 cr

• Star Export House (SEH) – Rs.100 cr.

• Trading House (TH) – Rs.500 cr.

• Star Trading House (STH) – Rs.2500 cr.

• Premier Trading House (PTH) – Rs.7500 cr.

Current Account Deficit - It occurs when a country's total imports of goods, services and transfers is greater than the country's total export of goods, services and transfers. This situation makes a country a net debtor to the rest of the world.

ATM: ATMs are Automated Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, give balances in the accounts and also give mini-statements to the customers. Presently, there are over 61,000 ATMs in India. Savings Bank customers can withdraw cash from any bank terminal up to 5 times in a month without being charged for the same. To address the customer service issues arising out of failed ATM transactions where the customer's account gets debited without actual disbursal of cash, RBI has mandated re-crediting of such failed transactions within 12 working day and mandated compensation for delays beyond the stipulated period. Penalty @ Rs.100 per day of delay, is payable by the Bank if not credited back in 12 days.

White-Label ATM – Owned and operated by a non-banking entity.

Brown label ATMs: ATM is named under brand of sponsor bank but not owned by the bank.

Mutual Fund: A company that invests in and professionally manages a diversified portfolio of securities and sells shares (called units) of the portfolio to investors. Mutual funds are investment companies that pool money from investors at large and offer to sell and buy back its units on a continuous basis and use the capital thus raised to invest in securities of different companies. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The net proceeds or losses are then typically distributed to the investors annually.

Short Forms / Acronyms

SEBI - Securities and Exchange Board of India

Trivia

First mutual fund in India – Unit Trust of India.

Many people think excitement is happiness. When you are excited you are not peaceful. True happiness is based on peace. ~ Thich Nhat Hanh

Courtesy : Reuters , The Hindu , Business Standard