Current Affairs For Bank, IBPS Exams - 27 July, 2015

Current Affairs for BANK, IBPS Exams

27 July 2015

:: National ::

Arun jaitely about P-notes & IFC

Seeking to calm panic-stricken investors,Finance Minister Arun Jaitley today said they need not fear any "knee-jerk" reaction from the government on the SIT report, which had recommended tough measures to check investment flows through P-Notes.
He also assured investors that the government will not take any action that may jeopardise investment climate even as the benchmark BSE Sensex tanked close to 500 points on fears of action on the suggestions of the Supreme Court appointed Special Investigation Team (SIT).

Participatory Notes

(P-Notes) are used by large number of foreign investors to invest in equity markets without disclosing their identity to the market regulator Sebi.
The SIT had suggested Sebi to put in place regulations to help identify individuals holding participatory notes or offshore derivative instruments (ODIs), and take other steps required to curb black money and tax evasion through the stock market route.
The BSE tanked 494.52 points or 1.76% to 27,617.79 in afternoon trade, while rupee fell to 64.03 against the US dollar in late morning deals.
A similar recommendation in 2007 had triggered a major collapse in the stock market, prompting the then Finance Minister P Chidambaram to announce that no such measures would be taken by the government.
Investments through P-Notes into India's capital market had touched a seven-year high of Rs 2.85 lakh crore in May. It was Rs 2.75 lakh crore at the end of June.
P-Notes make up mostly 15-20% of the total FII investment in India since 2009. However, it used to be much higher -- 25 to 40% -- in 2008.
Till a few years ago, P-Notes used to account for more than 50% of total FII investment, but their share has fallen over the years after Sebi tightened disclosure norms and other related regulations. The reading was as high as over 50% at the peak of stock market bull run in 2007.
P-Notes, mostly used by overseas HNIs (High Net Worth Individuals), hedge funds and other foreign institutions, allow such investors to invest in Indian markets through registered Foreign Institutional Investors (FIIs).
This saves time and cost for them, but on the flip side is the route can also be used for round-tripping of black money..
He said India has recently signed FATCA with the US, besides entered into multi-lateral agreements on automatic exchange of information and double taxation avoidance agreements.

Indian Financial Code revised draft

Finance Minister Arun Jaitley today said that the government will take a view on the draft Indian Financial Code, which proposes to dilute powers of the RBI chief, after receiving comments from stakeholders.
The draft had proposed taking away Reserve Bank chief's authority to veto the interest rate decision of the central bank's monetary policy committee.
The revised draft of Indian Financial Code (IFC) also proposed that the committee would have four representatives of the government and only three from the central bank, including the 'RBI Chairperson'.
The draft talks of 'RBI Chairperson' and not 'RBI Governor'. RBI is headed by a Governor, at present.
The revised draft of IFC, released by the Finance Ministry last week, is based on the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC), headed by Justice B N Srikrishna.
The IFC, which is conceived as an overarching legislation for the financial sector, proposes a monetary policy committee which will be entrusted with the task of deciding the key policy rate and chasing the annual retail inflation target to be decided by the government in consultation with RBI.

:: International ::

WTO strikes $1.3tn deal to wipe out IT trade tariffs

The World Trade Organisation (WTO) has agreed to eliminate trade tariffs on more than 200 technology products, paving the way for price cuts across a range of IT offerings from 2016.
These products include semi-conductors, magnetic resonance imaging machines, manufacturing tools for printed circuits, telecommunications satellites, touchscreens and more.
Furthermore, the agreement also sets out a commitment to addressing other barriers to trade in the IT sector, while maintaining a roll-call of products that could be included on the list at a later date.
The move marks an expansion of a similar deal waved through by the WTO in 1996, which benefited 81 of the organisation’s members and saw prices fall across a range of products.
However, many of the technology products that consumers and businesses rely on today weren’t covered by the 1996 deal, so in 2012 members began work on expanding it.
As a result, the updated arrangement will benefit all 161 members of the WTO, allowing them to take advantage of duty-free market access on the 201 listed products when participating in trades with one another.
This latest deal was voted for by 54 of the WTO’s 161 members, who now have until October to draft guidelines that outline how the terms of the proposals will be met, in the hope of having them officiated by December 2015.
This, the WTO claimed, should lead to tariffs being cut on some of the listed products by 2016, and all of them within the next three years.
Roberto Azevêdo, director-general of the WTO, said the “landmark deal” should open up new economic opportunities across the globe.

China and India top list of nations whose millionaires move abroad

We may be in the midst of “the Asian century,” but a new report shows that many of the wealthiest citizens of the continent’s two fastest-growing economies — China and India — have chosen to leave their countries and settle down abroad.
A total of 91,000 Chinese millionaires left the country and settled overseas in the past 14 years, while the exodus of Indian millionaires ranked second at 61,000, according to a report by consultancies New World Wealth and LIO Global.
France, Italy, Russia, Indonesia, South Africa and Egypt round out the top eight.
The study, released this month, looked at immigration data from 2000 and 2014 indicating applications for a second citizenship or change of domicile (permanent residence).
The U.K.—its capital city London, in particular—appears to be the most popular destination for the world’s rich to settle down in, followed by the U.S., Singapore, Australia and Hong Kong.
The report says Indians tend to move to countries like Australia and the United Arab Emirates, while Singapore and Hong Kong are popular destinations for China’s wealthy.
Despite the large-scale departure of millionaires, both China and India still have plenty of wealthy citizens who chose to stay back — reflected by their respective positions at fifth and 10th on the list of countries with the most millionaires overall.
They also remain the world’s most populous nations, sharing a third of the global population.
Those who leave generally cite reasons like “turmoil in home country, security concerns and optimizing education of children,” the report said.

:: Business ::

Yellow Signals from gold prices

The yellow metal dominated the world market scene all of last week. Gold slumped to a five-year low, slipping to an intra-day low-point of $1,072.30 by Friday.
A late rally that day, however, pushed prices back to around $1,100 an ounce. At best, it helped pare losses from last Monday when the price slid to its lowest since March 2009, to $1,088.05 an ounce.
The Comex gold futures for August still ended their fifth consecutive week in negative territory. Though the rally suggests that there could be an improvement in market sentiment, the bearish undertone persists among retail investors.
At the moment, everyone in the international marketplace is wary of gold. Indeed, price movement is set for an uncertain phase, at least in the near-term. The reasons behind the slipping interest in gold is not difficult to fathom.
A looming rise in the U.S. interest rate, for the first time in nearly a decade, is playing the villain. At the moment, a stronger dollar remains the topic that dominates discussions in the marketplace.
An inadvertent release on a rate forecast on the website of the Federal Reserve, though it was subsequently withdrawn, only helped to confound the confusion. Understandably, all eyes are now on the Federal Reserve.
Will it pull the trigger on rate hikes? Nevertheless, the dipping global oil prices hold hope for investors in gold.
A protracted oversupply situation, weak demand, the Greek crisis and the Chinese market fall have all come together to pull oil prices down.
The fall of oil could yet prove a rescuer for gold. If there is a serious consequential fallout on U.S. domestic inflation, the oil price fall could slow the Fed’s tightening policy.
A sustained recovery in gold prices, it appears, is inversely related to the growth prospects of the U.S. economy.

Rajesh Exports buys world's largest gold refining company

Jewellery company Rajesh Exports Ltd on Monday said that it has bought Valcambi, the world’s largest gold refining company, in an all-cash deal worth $400 million ( Rs 2560 crore).Reuters
The company was selected after a global search by Valcambi’s existing owners led by Newmont Mining Corp, the world’s largest gold jewellery maker said.
The deal will help it secure raw material supplies and will add to earnings per share, the company said.
India is the world’s biggest consumer of gold, with annual demand hovering around 900 tonnes per year.
The company said that with Valcambi acquisition, REL will become an integrated player covering precious metal refining and gold jewellery making.
Rajesh Exports said for the last three years on an average per year Valcambi generated revenues in excess of $38 billion (Rs 2,36,500 crore) by refining and selling 945 tons of gold and 325 tons of silver per year, which is more than India's average annual gold demand.