Money and Banking (Part - 2), Economy Traditional UPSC Notes | EduRev

Economy Traditional for UPSC (Civil Services) Prelims

UPSC : Money and Banking (Part - 2), Economy Traditional UPSC Notes | EduRev

The document Money and Banking (Part - 2), Economy Traditional UPSC Notes | EduRev is a part of the UPSC Course Economy Traditional for UPSC (Civil Services) Prelims.
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Damodaran Committee Report

The reforms in banking services, suggested by the committee are as follows:

  1. There should be no restriction of maintaining minimum balance in the account for obtaining facilities of cheque book and ATM card.
  2. Fixed deposits should not automatically be renewed without written permission/request of the depositor.
  3. The present limit of insurance cover of Rs. 1 lakh for deposits in savings account should be raised to Rs. 5 lakh.
  4. Home loan customers should not be penalised on closing their account before maturity period if they succeed in getting home loan at a lower interest rate from some other bank or financial institution.
  5. All documents kept against granting home loans should be retur-ned to the customer within 15 days from the date of full payment of loan.
  6. A common free call centre number should be made for the complaints against all banks from where the phone call be diverted to concerned bank.
  7. Each branch of a bank should have a separate counter earmarked for attending to senior citizens/physically challenged customers, who should be given priority over other customers at that special counter. 
  8. Senior citizens are at present offered an additional interest of up to 1% on all fixed deposits. 
  9. The same benefit of additional interest should be offered to them on their savings deposits also.
  10. The penalty, if levied on with drawal of deposits before maturity, should not be applied to senior citizens/physically challenged customers, who should be given the normal rate of interest applicable for the period for which the deposit has run, with out any deductions.

 

Major Financial Institutions in India

Imperial Bank of India

1921

Reserve Bank of India (Nationalisation of RBI  took place on January 1,1949)

April 1,1935

Industrial Finance Corporation of India

1948

State Bank of India

July 1,1955

Unit Trust of India

Feb. 1,1964

Bifurcation of UTI (UTI-I & UTI-II)

Feb. 2003

IDBI

July 1964

NABARD

July 12,1982

IRBI (Now it has been renamed as IIBIL since March 6,1997)

March  20,1985

SIDBI

1990

EXIMBank

January 1,1982

National Housing Bank

July 1988

Life Insurance Corporation (LIC)

September 1956

General Insurance Corporation (GIC)

November 1972

Regional Rural Banks

Oct. 2,1975

Risk Capital and Technology Finance Corporation Ltd.

March 1975

Technology Development & Information Co.  of India Ltd.

1989

Infrastructure Leasing & Financial Services Ltd.

1988

Housing Development Finance Corporation Ltd.  (HDFC)

1977

 

Securities and Exchange Board of India (SEBI)

  • SEBI (Securities and Exchange Board of India) was initially constituted on April 12, 1988 as a nonstatutory body through a resolution of the Government for dealing with all matters relating to development and regulation of securities market and investor protection and to advise the Government on all these matters. 
  • SEBI was given statutory status and powers through an ordinance promulgated on January 30, 1992.
  • The statutory powers arra functions of SEBI were strengthened through the promulgation of the Securities Laws (Amendment) ordinance on January 25, 1995 which was subsequently replaced by an Act of Parliament.

Recognised Stock Exchanges in India

  1. Ahmedabad Stock Exchange Ltd.
  2. Bangalore Stock Exchange Ltd.
  3. Bhubaneshwar Stock Exchange Ltd.
  4. Bombay Stock Exchange Ltd.
  5. The Calcutta Stock Exchange Ltd.
  6. Cochin Stock Exchange Ltd.
  7. The Delhi Stock Exchange Ltd.
  8. The  Gauhati  Stock Exchange Limited
  9. Inter connected Stock Exchange of India Ltd.
  10. Jaipur Stock Exchange Ltd.
  11. The Ludhiana Stock Exchange Ltd.
  12. Madras Stock Exchange Ltd.
  13. Madhya Pradesh Stock Exchange Ltd.
  14. MCX Stock Exchange Ltd.
  15. National Stock Exchange of India Ltd.
  16. OTC Exchange of India
  17. Pune Stock Exchange Ltd.
  18. U.P. Stock Exchange Ltd.
  19. United Stock Exchange of India Ltd.
  20. Vadodara Stock Exchange Ltd.

Derecognised Stock Exchanges

  1. Hyderabad Stock Exchange
  2. Magadh Stock Exchange
  3. Saurashtra Kutch Stock Exchange
  4. Mangalore Stock Exchange
  5. Coimbatore Stock Exchange

Functions of SEBI

  1. To safeguard the interests of investors and to regulate capital market with suitable measures.
  2. To regulate the business of stock exchanges and other securities market.
  3. To regulate the working of Stock Brokers, Sub-brokers, Share Transfer Agents, Trustees, Merchant B ankers, Underwriters, Portfolio Managers etc. and also to make their registration.
  4. To register and regulate collec-tive investment plans of mutual funds.
  5. To encourage self-regulatory organisations.
  6. To eliminate malpractices of security markets.
  7. To train the persons associated with security markets and also to encourage investors education.
  8. To check insider trading of secu-rities.
  9. To supervise the working of various organisations trading in security market and also to ensure systematic dealings.
  10. To promote research and investigations for ensuring the attainment of above objectives.

Mistry Committee Report

  • Full capital account convertibility by 2008-end.
  • Eliminate securities transaction tax by 2007 and stamp duties by 2008.
  • Open up purchase of rupee-denominated debt instruments issued by the government to all buyers.
  • Focus monetary authority exclusively on single task of managing key short-term ‘base rate’ by 2009-10.
  • Set up independent public debt man-agement office by 2009.
  • Shift financial regulatory regime from rules-based regulation to principles-based regulation by 2011.
  • Permit unrestricted entry of wellknown global accounting firms operating in IFCs/GFCs by 2008.
  • Transfer all regulation/supervision of any type of organised financial trading to SEBI by 2008.

Industrial Development Bank of India (IDBI)

Industrial Development Bank of firaia (IDBI) established under Industrial Development Bank of India Act, 1964, was the principal financial institution for providing credit and other facilities for developing industries and assisting development institution. 

  • The IDBI which was established as Development Finance Institution under IDBI Act, 1964 has been converted as a banking company.
  • Parliament passed the Act so as to cancel out IDBI Act, 1964 and to open the way for the registration of this new banking company.
  • IDBI got the certificate of commencement of business on Sept. 28, 2004 and the IDBI was transformed into IDBI Ltd. on October 1, 2004, a company under the Companies Act, 1956 and a Scheduled Bank (on October 11, 2004) under the RBI Act, 1934.

Small Industries Development Bank of India (SIDBI)

Small Industries Development Bank of India (SIDBI) was established as wholly owned subsidiary of IDBI under the Small Industries Development Bank of India Act, 1989 as the principal financial institution for promotion, financing and development of industries in the small scale sector.

  • SIDBI also co-ordinates the activities of agencies which provide finances to small enterprises. 
  • SIDBI started its operations from April 2, 1990. 
  • Its headquarter is situated at Lucknow.
  • 5 Regional and 21 Branch Offices have also been started in different parts of the country.
  • All duties related to small enterprises which were performed by IDBI, have been shifted to SIDBI. 
  • SIDBI provides assistance to the small scale industrial sector in the country through other institutions like State Financial Corporations (SFC), Commercial Banks, State Industrial Development Corporations etc.

Industrial Finance Corporation of India Ltd. (IFCI)

  • Industrial Finance Corporation of India Ltd. was established in 1948 under a Special Act on the re-commendations of Central Banking Enquiry Committee. 
  • The basic aim of IFCI is to arrange medium and longterm credit for various industrial enterprises of the country. 
  • Initially the authorised capital of the corporation was Rs. 10 crore which was divided in equities of Rs. 5000 each. 
  • Later on this authorised capital was increased upto Rs. 20 crore.
  • Since July 1, 1993 this corporation has been converted into a company and it has been given the status of a Ltd. company with the name Industrial Finance Corporation of India Ltd.


Export-Import Bank of India (EXIM Bank)

  • EXIM bank in India was esta-blished on January 1, 1982 for financing, facilitating and promoting foreign trade in India. Besides, EXIM Bank also discharges duties of coordinating the activities of various financial institutions, providing finances for export and imports of goods and services.
  • Besides India, this bank also manages finances to third world countries for export and import of goods and services. 
  • The Govt, of India wholly owns EXIM Bank of India. During the year 2009-10, EXIM Bank received share capital of Rs. 300 crore from Government of India. On March 31, 2010 the paid-up capital of Bank was Rs. 1700 crore.
  • During the year ended March 31. 2010, EXIM Bank sanctioned loans of Rs. 38,843 crore while disbursements amounted to Rs. 33,249 crore. 
  • Profit after tax of the EXIM Bank for the year 2009-10 amounted to Rs. 513 crore.

National Housing Bank (NHB)

  • National Housing Bank was established in July 1988 as wholly owned subsidiary of RBI.
  • NHB is the apex banking institution providing finances for houses.
  • The statutory mandate of NHB covers promotional, developmental and regulatory aspects of housing finance with focus on developing a sound housing finance system.
  • NHB amended its Act called NHB (Amendment) Act, 2000 which came into force on June 12, 2000. 
  • NHB has made a number of efforts to promote the supply of real resources like land and building material. 

 

Important Insurance Policies
PolicySpecial Features
► Social Security Group Scheme♦ Administered by LIC.
♦ Fulfils Insurance requirements of the weaker and vulnerable sections of the society.
♦ People of age group 18-60 years are covered.
Jana Shree Bima Yojana

♦ Insurance of Rs. 5000 on death due to natural cause and oft 25000 on death due to accident.
♦ In operation since August 10, 2000.
♦Replaced Social Security Group Insurance Scheme (SSGIS) and Rural Group Life Insurance Scheme (RGLIS).
♦ Insurance coverage of Rs. 20000 on natural death and of Rs.50000 on accidental death. On partial permanent disability due to accident the benefit is Rs. 25,000.
♦ Premium is Rs. 200 per member (50% of premium is met by Central Government out of Social Security Fund).

► Krishi Shramik Samajik Suraksha Yojana (Sale of new policies discontinued from December 2003)♦ Minimum membership of the group should be 25.
♦ Commencement since July 1, 2001.
♦ Provides Life Insurance protections, periodical lumpsum survival benefit and pension to agricultural workers.
♦ Age group 18-50 years.
♦ Minimum membership of the group at commencement should be 20.
♦ On natural death before age 60, Rs. 20000 plus accumulated amount with interest and on accidental death Rs. 50000 is payable.
► Shiksha Sahyog Yojana♦ Premium oft 365 per annum.
♦Scheme, launched on December 31, 2001.
♦ Provides educational scholarship of Rs. 300 per quarter per child for a maximum period of four years and for two children of a member covered under Janashree Bima Yojana.
► Mediclaim Insurance Policy♦ No premium is charged.
♦Provides reimbursement of medical expenses towards hospitalisation etc.
♦ Policy age coverage 5-80 years.
 
► Jan Arogya Bima Policy

♦ Income Tax benefit upto Rs. 10000 US 80-D (for senior citizen this benefit limit is Rs. 15000).
♦ Covers that segment of the population who cannot afford high cost of medical treatment.
♦ Premium of adult upto age 45 years is Rs. 70 and for children Rs. 50 only.

► Overseas Medical Policy♦ Coverage against medical expenses. Inflight personal accident upto US $ 10000 and loss of Passport cover upto US $ 150.
 ► Videsh Yatra Mitra Policy♦ Commencement since January 1,1998.
♦ Covers supplementary benefits besides providing indemnity for medical expenses during the period of overseas travel.
♦ Policy introduced by four General Insurance Companies.
► Bhagya Shree Child Welfare Bima Yojana
♦ Commencement since October 19,1998.
♦ Covers one girl child in a family upto age 18 years whose parents age does not exceed 60 years.
♦ Premium Rs. 15 per annum.
 Raj Rajeshwari Mahila Kalyan Yojana♦ In case of death of both or either of parents Rs. 25000 is deposited in the name of the girl.
♦ Commencement since October 19, 1998.
♦ Provides security to women in the age group of 10 to 75 years irrespectives of their income, occupation or vocation.
 Ashray Bima Yojana♦ Insurance of Rs. 25000, Premium Rs. 15 per annum.
♦ Security coverage to workers in case of loss of jobs (Scheme introduced w.e.f. October 10, 2001).
♦ Maximum Rs. 3000 assistance to the worker till he/she gets an alternative employment.
►  J aid Rahat Yojana Personal Accident Insurance♦ Introduced for expediting the payment of compensation to road accident victims.
♦ Covers KCC holders upto age 70 years. Scheme for Kisan Credit Card Scheme (KCCS)  introduced from October  10, 2001.
♦ Rs. 50,000 insurance cover against accidental death or permanent disability and Rs. 25,000 compensation for partial disability.
♦ Premium is Rs.17.85 per person per year while for a 3 years policy the premium is Rs. 45 per person.

 

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