JNANA VARDHINI

SIBSTC MONTHLY NEWSLETTER -COVERING CONTEMPORARY BANKING RELATED TOPICS

10th Issue
MAY- 2011

SOUTHERN INDIA BANKS STAFF TRAINING COLLEGE No.531, Faiz Avenue, 11th Main, 32nd Cross IV Block, Jayanagar, BANGALORE-560 011 Website: www.sibstc.edu.in Email: contactus@sibstc.edu.in
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principal@sibstc.edu.in I.
FEATURES OF VARIOUS DEPOSIT SCHEMES AVAILABLE TO NON-RESIDENT INDIANS (NRIS)
Foreign Currency (NonResident) Account (Banks) Scheme [FCNR (B) Account] Who can open an NRIs (individuals / entities of account Bangladesh/ Pakistan nationality/ ownership require prior approval of RBI) Particulars Non-Resident (External) Non-Resident Rupee Account Scheme Ordinary Rupee [NRE Account] Account Scheme [NRO Account] NRIs (individuals / Any person resident entities of Bangladesh / outside India (other than Pakistan a person resident in nationality/ownership Nepal and Bhutan). require prior approval of Individuals / entities of RBI) Bangladesh / Pakistan nationality / ownership as well as erstwhile Overseas Corporate Bodies require prior approval of the RBI. In the names of two or May be held jointly more non-resident with residents individuals provided all the account holders are persons of Indian nationality or origin. Permitted Permitted Indian Rupees Indian Rupees

Joint account

In the names of two or more non-resident individuals provided all the account holders are persons of Indian nationality or origin.

Nomination Currency in which account is denominated Repatriablity

Permitted Pound Sterling, US Dollar, Japanese Yen, Euro, Canadian Dollar and Australian Dollar Repatriable Repatriable

Not repatriable except for the following: Current income up to USD 1 million per financial year for any bonafide purpose, out of the balances in the account, e.g., sale proceeds of assets in India acquired by way of purchase/ inheritance / legacy inclusive of assets acquired out of

Type of Account Period for fixed deposits Rate of Interest

settlement subject to certain conditions Term Deposit only Savings, Current, Savings, Current, Recurring, Fixed Deposit Recurring, Fixed Deposit For terms not less than 1 year At the discretion of the As applicable to and not more than 5 years bank resident accounts. Subject to a cap as stipulated Subject to a cap as Fixed/ Recurring by RBI. At present, with stipulated by RBI. Deposits effect from 15.11.2008, Banks are free to interest is paid within the Fixed/Recurring determine interest rates ceiling rate of LIBOR / Deposits for term deposits. SWAP rates plus 100 basis At present, with effect points for the respective from 15.11.2008, interest SBAccount currency/ corresponding rates on NRE deposits for Interest rate shall be at maturities. one to three years should the rate applicable to not exceed the domestic savings On floating rate deposits, LIBOR/SWAP rates plus account. interest is paid within the 175 basis points for ceiling of SWAP rates for the corresponding maturities, respective currency / maturity as on the last working day plus 100 basis points. of the previous month, for US dollar of For floating rate deposits, the corresponding maturities. interest reset period is six The interest rates as months. determined above for three year deposits will also be applicable in case the maturity period exceeds three years. SBAccount: Interest rate shall be at the rate applicable to domestic savings account. Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels.

Operations by Power of Attorney in favour of a resident by the non-resident account holder

Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments or remittance to the account holder himself through normal banking channels

Operations in the account in terms of Power of Attorney is restricted to withdrawals for permissible local payments in rupees, remittance of current income to the account holder outside India or remittance to the

account holder himself through normal banking channels. Remittance is subject to the ceiling of USD 1(one) million per financial year. Loans a. In India i) to the Account holder i) to Third Parties b)Abroad i) to the Account holder Permitted only up to Rs.100 lakhs Permitted only up to Rs.100 lakhs Permitted (Provided no funds are remitted back to India and are used abroad ) Permitted (Provided no funds are remitted back to India and are used abroad only) Permitted up to Rs.100 Permitted subject to the lakhs extant rules Permitted up to Rs.100 Permitted, subject lakhs conditions Permitted (Provided no funds are remitted back to India and Not Permitted are used abroad only) Permitted Not Permitted (Provided no funds are remitted back to India and are used abroad only) to

ii) to Third Parties c. Foreign Currency Loans in India

i) to the Account Permitted up to Rs.100 lakhs holder ii) to Third Not Permitted Parties Purpose of Loan i) Personal purposes or for In India to the carrying on business activities Account holder * ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies

Not Permitted Not Permitted

Not Permitted Not Permitted

i) Personal purposes or Personal requirement for carrying on business and / or business activities.* purpose.* ii) Direct investment in India on non-repatriation basis by way of contribution to the capital of Indian firms / companies.

Purpose of Loan in India to Third Parties

iii) Acquisition of flat / house in India for his own residential use. Fund based and / or non-fund based facilities for personal purposes or for carrying on business activities

iii) Acquisition of flat / house in India for his own residential use. Fund based and / or non- Personal requirement fund based facilities for and / or business personal purposes or for purpose * carrying on business activities *.

Purpose of Loan Abroad To the account holder and Third Parties

Fund based and / or non-fund Fund based and / or non- Not permitted. based facilities for bonafide fund based facilities for purposes. bonafide purposes.

* The loans cannot be utilized for the purpose of on-lending or for carrying on agriculture or plantation activities or for investment in real estate business. Note : a. When a person resident in India leaves India for Nepal and Bhutan for taking up employment or for carrying on business or vocation or for any other purpose indicating his intention to stay in Nepal and Bhutan for an uncertain period, his existing account will continue as a resident account. Such account should not be designated as Non-resident (Ordinary) Rupee Account. b. ADs may open and maintain NRE / FCNR (B) Accounts of persons resident in Nepal and Bhutan who are citizens of India or of Indian origin, provided the funds for opening these accounts are remitted in free foreign exchange. Interest earned in NRE / FCNR (B) accounts can be remitted only in Indian rupees to NRIs and PIO resident in Nepal and Bhutan. c. In terms of Regulation 4(4) of FEMA, ADs may open and maintain Rupee accounts for a person resident in Nepal and Bhutan. d. AD Category I banks and authorized banks may credit the proceeds of account payee cheques/ demand drafts / bankers' cheques, issued against encashment of foreign currency to the NRE account of the NRI account holder where the instruments issued to the NRE account holder are supported by encashment certificate issued by AD Category-I / Category-II. e. AD Category I banks and authorised banks may permit remittance of the maturity proceeds of FCNR (B) deposits to third parties outside India, provided the transaction is specifically authorised by the account holder and the Authorised Dealer is satisfied about the bonafides of the transaction.

(Source: RBI FAQ series, updated till 11.04.2011) WORLD TRADE ORGANISATION (WTO)
The World Trade Organization (WTO) is born out of negotiations during the period 1986-94 called Uruguay round under the Marrakech Agreement and replaced General Agreement on Trade and Tariffs (GATT), which started in 1948. WTO commenced its activities from 01.01.1995 replacing GATT. WTO deals with regulation of trade between participating countries. It provides a framework for negotiating and formalizing trade agreements and dispute resolutions among the member countries Most of the issues that the WTO focuses are derived from previous trade negotiations, especially from the Uruguay Round (19861994). The WTO has 153 members, representing more than 97% of the world's population, and 30 observers, most seeking membership. The WTO's headquarters is at the Geneva, Switzerland. GATT: A systematized International trade among the countries started in 1948 as per the rules framed under General Agreement for Trade and Tariffs (GATT). During the period 1948 to 1994, the trading system came under GATT. GATT helped establish a strong and prosperous multilateral trading system that became more and more liberal through rounds of trade negotiations. But by the 1980s the system needed a thorough overhaul particularly with the major roles played service industries for the economic development of the countries. This led to the Uruguay Round and ultimately to the WTO. The WTO is a wider version covering trade, services, inventions, creations and intellectual property. WTO agreements are negotiated and signed by the bulk of the worlds trading nations. These documents provide legal ground rules for international trade and commerce. WTO started with the following broad principles viz. General Agreement on Trade & Tariffs GATT (for goods) General Agreement on Trade in Services (GATS) Trade Related Aspects of Intellectual Property Rights (TRIPS)

The main objectives of WTO are to help free trade/ services flow across countries in a transparent manner. It helps liberalize trade and services between countries. WTO deals with the rules of trade between nations at a global level. The WTOs creation in 1995 marked the biggest reform of international trade since after the Second World War. It also brought to reality in an updated form the failed attempt in 1948 to create an International Trade Organization. Functions of WTO

Administering WTO trade agreements Forum for Trade negotiations Handling trade disputes Monitoring national trade policy Co-operations with other international organizations.

Head of WTO Pascal Lamy (France) Earlier WTO Chiefs Renato Ruggiero (Italy) 1995-99 Mike Moore (New Zealand) 1999-02 Supachai Panitchpakdi (Thailand) 2002-05 Pascal Lamy (France) Present chief of WTO 2005 The WTO agreements fall into the following six main parts:

The Agreement Establishing the WTO Goods and Investment- the Multilateral Agreements on Trade in Goods including the GATT 1994 and the Trade Related Investment Measures. Services the General Agreement on Trade in Services. Intellectual Property the Agreement on Trade Related Aspects of Intellectual Property rights (TRIPS) Dispute settlement (DSU) Reviews of governments' trade policies (TPRM)

The Doha Development Round started in 2001 and continues today. The WTO launched the current round of negotiations, the Doha Development Agenda (DDA) or Doha Round, at the fourth ministerial conference in Doha Qatar in November 2001. The Doha round was to be an ambitious effort to make globalization more inclusive and help the world's poor, particularly by slashing barriers and subsidies in farming. The initial agenda comprised both further trade liberalization and new rule-making, underpinned by commitments to strengthen substantial assistance to developing countries. The negotiations have been highly contentious and agreement has not been reached, despite the intense negotiations at several ministerial conferences and at other sessions. Disagreements still continue over several key areas including agriculture subsidies. Talks have stalled over a divide on major issues, such as agriculture, industrial tariffs and non tariff barriers, services, and trade remedies. The most significant differences are between developed nations led by the European Union (EU), the United States (USA), and Japan and the major developing countries led and represented mainly by Brazil, China, India, 7

South Korea, and South Africa. There is also considerable contention against and between the EU and the USA over their maintenance of agricultural subsidiesseen to operate effectively as trade barriers.

Current progress
Several countries have called for negotiations to start again. Brazil, called several countries leaders to urge them to renew negotiations. Pascal Lamy visited India to discuss possible solutions to the impasse. A mini-ministerial meeting held in India on September 2010. The declaration at the end of the G20 summit of world leaders in London in 2009 included a pledge to complete the Doha round. At the 2011 annual conference of the World Economic Forum in Davos, British Prime Minister David Cameron called for the Doha talks to conclude by the end of the year, saying that "We've been at this Doha round for far too long. It's frankly ridiculous that it has taken 10 years to do this deal." Similar comments were made by German Chancellor Angela Merkel and former WTO director-general Peter Sutherland. Efforts are on to resolve the issue and to forge ahead as per the terms of Doha Round with subsequent changes.

INTERNATIONAL MONETARY FUND (IMF)

The International Monetary Fund (IMF) is the intergovernmental organization that oversees the global financial system by following the macroeconomic policies of its member countries. Its objectives are to stabilize international exchange rates and facilitate development through the encouragement of liberalizing economic policies in other countries as a condition of loans, debt relief, and aid. It also offers loans with varying levels of conditionality, mainly to poorer countries. During the Great Depression of the 1930s, countries attempted to shore up their failing economies by sharply raising barriers to foreign trade, devaluing their currencies to compete against each other for export markets, and curtailing their citizens' freedom to hold foreign exchange. These attempts proved to be self-defeating. World trade declined sharply, and employment and living standards plummeted in many countries. This breakdown in international monetary cooperation led the IMF's founders to plan an institution charged with overseeing the international monetary systemthe system of exchange rates and international payments that enables countries and their citizens to buy goods and services from each other. The new global entity to ensure exchange rate stability and encourage its member countries to eliminate exchange restrictions that hindered trade

With the above background, the International Monetary Fund was conceived in July 1944 originally with 45 members and came into existence in December 1945 with a goal to stabilize exchange rates and assist the reconstruction of the worlds international payment system. Countries contributed to a pool on a temporary basis, which could be borrowed by countries with payment imbalances. The IMF was important when it was first created because it helped the world stabilize the economic system. The IMF works to improve the economies of its member countries. IMF began its operations on March 1, 1947. Later that year, France became the first country to borrow from the IMF. IMFs headquarters is in Washington DC The IMF describes itself as an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the World The IMF's fundamental mission is to help ensure stability in the international system. It does so in three ways: keeping track of the global economy and the economies of member countries; lending to countries with balance of payments difficulties; and giving practical help to members. The IMF oversees the international monetary system and monitors the financial and economic policies of its members. It keeps track of economic developments on a national, regional, and global basis, consulting regularly with member countries and providing them with macroeconomic and financial policy advice. To assist mainly low- and middle-income countries in effectively managing their economies, the IMF provides practical guidance and training on how to upgrade institutions, and design appropriate macroeconomic, financial, and structural policies. Lending: The IMF provides loans to countries that have trouble in meeting their international payments and cannot otherwise find sufficient financing on affordable terms. This financial assistance is designed to help countries restore macroeconomic stability by rebuilding their international reserves, stabilizing their currencies, and paying for importsall necessary conditions for relaunching growth. The IMF also provides concessional loans to lowincome countries to help them develop their economies and reduce poverty.

MAHARATNA PSUs
According to the criteria laid down by the Cabinet, the Maharatna status is granted to listed navaratna PSUs with an average annual turnover of more than Rs 25,000 crore, net profit after tax of Rs 5,000 crore and net worth of Rs 15,000 crore during the past three years. Government has conferred Maharatna PSU status in respect of the following companies:

1. 2. 3. 4. 5.

Steel Authority of India Limited (SAIL) National Thermal Power Corporation (NTPC) Indian Oil Corporation (IOC) Oil and Natural Gas Corporation (ONGC) Coal India Ltd (CIL)

These companies have been granted a higher level of financial and managerial autonomy. They are qualified for the coveted status according to the criteria laid down by the Cabinet in December 2009 which now empowers them to make foreign investments of upto Rs 5,000 crore on their own. Navaratna PSUs 1. 2. 3. 4. 5. 6. 7. 8. 9. BHELBPCLHPCLMTNLGAILBELHALPFCNMDCBarath Heavy Electrical ltd Barath Petroleum Corporation ltd Hindustan Petroleum Corporation ltd Mahanagar Telephone Nigam Ltd Gas Authority of India ltd Barath Electronics ltd Hindustan Aeronautical Ltd Power Finance Corporation National Mineral Development Corporation

Newly Added Navaratna PSUs:

PGCIL- Power Grid Corporation of India Ltd RECRural Electrification Corporation NALCO- National Aluminum Company

MINI Ratnas:

IRCTC- Indian Railways Catering and Tourism Corporation Satluz Hydro power Corporation National Hydro Power Corporation

LOKPAL BILL
Lokpal Bill is a measure to combat corruption at the High offices. It provides for filing complaints of corruption against the Ministers and Members of Parliament, Judges and so on with the Ombudsman. Anyone, except for a public servant, can file a complaint and the Lokpal has to complete the inquiry within six months. It is expected to provide speedy, cheaper form of justice to people. 10

The Administrative Reforms Commission(ARC) while recommending the constitution of Lokpal was convinced that such an institution was justified not only for removing the sense of injustice from the minds of adversely affected citizens but also necessary to instill public confidence in the efficiency of administrative machinery. Following this, the Lokpal Bill was for the first time presented during the fourth Lok Sabha in 1968, and was passed there in 1969 but could not get through Rajya Sabha. However, the Lok Sabha was dissolved, resulting in the first death of the bill. It was revived in 1971, 1977, 1985, 1989, 1996, 1998, 2001, 2005 and 2008 but failed to be passed in all these times.

JAN LOKPAL BILL

The Jan Lokpal Bill (Citizen's ombudsman Bill) is a draft anti-corruption bill drawn up by prominent civil society activists seeking the appointment of a Jan Lokpal, an independent body that would investigate corruption cases, complete the investigation within a year and envisages trial in the case getting over in the next one year. Drafted by Justice Santosh Hegde (former Supreme Court Judge and present Lokayukta of Karnataka), Prashant Bhushan (Supreme Court Lawyer) and Arvind Kejriwal (RTI activist), the draft Bill envisages a system where a corrupt person found guilty would go to jail within two years of the complaint being made and his ill-gotten wealth being confiscated. It also seeks power to the Jan Lokpal to prosecute politicians and bureaucrats without government permission.

CLOUD COMPUTING
Cloud computing refers to the provision of computational resources on demand via a computer network. In the traditional model of computing, both data and software are fully contained on the user's computer. In cloud computing, the user's computer may contain almost no software or data (perhaps a minimal operating system and web browser only), serving as little more than a display terminal for processes occurring on a network of computers far away. The most common analogy to explain cloud computing is that of public utilities such as electricity, gas, and water. Just as centralized and standardized utilities free individuals from the difficulties of generating electricity or pumping water, cloud computing frees users from certain hardware and software installation and maintenance tasks through the use of simpler hardware that accesses a vast network of computing resources (processors, hard drives, etc.). The sharing of resources reduces the cost to individuals. The phrase cloud computing originated from the cloud symbol that is usually used by flow charts and diagrams to symbolize the internet. The principle behind the cloud is that any computer connected to the internet is connected to the same pool of computing power, applications, and files. Users can store and access personal files such as music, pictures,

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videos, and bookmarks or play games or use productivity applications on a remote server rather than physically carrying around a storage medium such as a DVD or thumb drive. Almost all users of the internet may be using a form of cloud computing though few realize it.

APPROACH TO 12TH FIVE YEAR PLAN

The Planning commission announced the approach to 12th five year plan on 21st April 2011. The salient features are: Further liberalization of the Foreign Direct Investment (FDI) policy and improvement of business regulations to step up GDP growth rate to 9-9.5 per cent a year on an average. Need to improve business regulatory framework, improving in cost of doing businesses and transparency. India needs 100,000 Mw of power capacity in the 12th Plan period (2012-2017). Inflation at 5-5.2 per cent during the 12th Plan. Agriculture sector projected to grow 4 per cent in the Plan period, with a focus on non-cereal food items, including milk and fish. Education, Health and Infrastructure are the priority areas under 12th plan. The estimated requirement for Infrastructure development is USD 1 Trillion. Unparalleled expansion to India's power network, roads, railways, ports and airports is planned under the government's US$ 1 trillion 12th five year plan, fuelling India's potential to overtake Japan as the worlds' third largest construction market by 2018.

CENSUS 2011(PROVISIONAL) - HIGHLIGHTS

The population of the country as per the provisional figures of Census 2011 is 121 crore of which 62.36 crore (51.54%) are males and 58.64 crore (48.46%) are females. The provisional figures of Census 2011 were released in New Delhi on Thursday by Union home secretary Shri G.K.Pillai and RGI Shri C Chandramouli. The major highlights of the Census 2011 (Provisional figures) are as under: The population of India has increased by more than 18.1 crore during the decade 2001-2011. Percentage growth in 2001-2011 is 17.64; males 17.19 and females 18.12. Literacy rate has gone up from 64.83 per cent in 2001 to 74.04 per cent in 2011 showing an increase of 9.21 percentage points. 2001-2011 is the first decade (with the exception of 1911-1921) which has actually added lesser population compared to the previous decade. 12

Uttar Pradesh (19.95 crore) is the most populous State in the country followed by Maharashtra with 11.2 crore. Population (0-6 years) 2001-2011 registered minus (-)3.08 percent growth with minus (-)2.42 for males and -3.80 for females. Overall sex ratio at the national level has increased by 7 points to reach 940 at Census 2011 as against 933 in Census 2001. This is the highest sex ratio recorded since Census 1971 and a shade lower than 1961. Increase in sex ratio is observed in 29 States/UTs. Kerala with 1084 has the highest sex ratio followed by Puducherry with 1038, Daman & Diu has the lowest sex ratio of 618.

RBI POLICY RATES

SLR CRR Bank Rate Repo Reverse Repo 24% 6% 6% 7.25% 6.25%

LAUNCHING OF COLLEGE WEBSITE & NEW E-MAILS

The proudly announces Launching of its website www.sibstc.edu.in. Complete information about the college, the programs as also the JNANA VARDHINIs right from the 1st issue of August 2010 is available in our website. The College has also procured new email ids: College

contactus@sibstc.edu.in & principal@sibstc.edu.in

All correspondences of the College are done through the above e mail ids.

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