Current Affairs For Bank, IBPS Exams

03 December 2013

RBI begins process to identify too-big-to-fail banks

• The Reserve Bank of India (RBI) has started the process to identify domestic systemically important banks (D-SIBs)—large and highly interconnected financial institutions—whose failures can impact the orderly functioning of the financial system and harm the economy.

• In a separate notification, RBI emphasized the need for stress tests by banks to ascertain the state of the banking system and identify risk elements in the economy.

• RBI governor Raghuram Rajan has all along been arguing for identification of SIBs, often perceived as institutions too-big-to-fail as a precondition for financial stability, among other issues.

• Similar efforts have been made in major financial markets to safeguard the financial system from any possible crisis situation such as the one in 2008, where large financial institutions faltered due to loss of confidence in the financial system.

• Though foreign banks in India have smaller balance sheets, some of them will be included in the list as they are active in the derivatives market.

• Banks classified as D-SIBs will be subjected to additional capital requirement in the range of 0.2% to 1% of their risk weighted assets.

• The higher capital requirements will be applicable from April 2016 in a phased manner and the process will be completed by April 2019. The names of the banks classified as D-SIBs will be disclosed in August every year, starting from 2015.

• The D-SIBs will be subjected to tighter regulatory measures, including liquidity surcharges, tighter large exposure restrictions and more intensive supervision in the form of higher frequency and higher intensity of on- and off-site monitoring.

India needs market-based energy pricing to meet vast needs

• With India expected to become world's third largest energy consumer in seven years, Prime Minister Manmohan Singh said that market-based pricing and technology are essential for meeting the nation's needs in this regard.
• India, is currently is world's seventh largest energy producer. With oil and gas constituting around 41 % of India's primary energy consumption, India is expected to be the 3rd largest energy consumer by 2020.
• India is currently fourth largest energy consumer behind US, China and Japan.
• To bridge the gap between supply and demand, the government is encouraging domestic and global companies to explore onshore and offshore regions.
• He cited the example of US shale gas revolution where technology and market-based pricing helped exploit the unconventional gas resource and turn the country into energy surplus.
• India is also progressively pursuing other options to achieve energy security.
• India, which imports about 80 % of its oil needs and more than half of its natural gas requirement, has market based pricing for crude but sub-market rates for gas.
• It is expected that Asia will continue to occupy the same share in global LNG demand despite its growth being projected to go up by 2 to 3 times the current levels by the year 2020.

Cook and Dhoni named captains of ICC teams of the year

• England captain Alastair Cook was named skipper of the International Cricket Council's (ICC) test team of this year .
• The left-handed opener's England team mates Graeme Swann and James Anderson were also included in the 11-man team while world number one test side South Africa were represented by four players.
• South Africa paceman Dale Steyn was included in the test side for the sixth consecutive year, while two players each from Australia and India made up the remaining four slots.

MS Dhoni signs a record Rs25 crore bat endorsement deal with Spartan Sports and Amity University

• A deal signed between Indian cricket captain MS Dhoni with sports brand Spartan Sports and education brand Amity University amounting to Rs25 crore has increased his brand value.
• Dhoni was usurped by Virat Kohli recently, as the top ad magnet in Indian sports but this new bat deal between the Indian star who is in South Africa now was represented by Arun Pandey of Rhiti Sports, the company that manages him.
• Spartan Sports already sponsors Australian captain Michael Clarke and Olympic gold medal-winning Australian swimmer Stephanie Rice and MS Dhoni is another big name they have signed.
• A new bat range named '7 by MSD' is to enter the market soon and Dhoni's bats will also sport the logo.
• The logo of Amity University with interests in education will also feature on Dhoni's bat.

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