Pages

Friday, May 20, 2011

Remain Auto-informed through SMS.

You may send your name and mobile nos. by e-mail to remain auto-informed through SMS regarding new posting in this Blog. Non-ICSA students and ex-ICSA students are also welcome.

ICSA 2011 GS Indian Econ Q & A Session--III, Dated 12 May, 2011

Question and Answer Session
Indian Economics
1.What was the HDI of India in 2010?
a)0.547 ; b) 0.572; c) 0.519; d) 0.527
2. Central Government started making a special contribution for development of social service in the North East starting from which of the following year?
a) 2005-06; b) 2006-07; c) 2007-08; d) 2008-09
3.Of the total central government expenditure, the expenditure on social services,rural development and PMGSY in 2009-10 revised estimate contributed to
a) 14.77%; b) 18.32%; c) 18.44%; d) 19.27%
4. Of the social services expenditure of the central government in 2009-10 revised estimate, the share of education was
a) 43.9%; b) 42.4%; c) 45.0%; d) 43.0%
5. The average proportion of the households availing banking facilities in India is
a) 31.8%; b) 35.8%; c) 37.5%; 29.7%
6. How much money has been allocated to Sarva Shiksha Abhiyan in the Union Budget 2011-12
a) Rs.21000 ; b) Rs.18000; c) Rs. 15000; d) None of these
7. The number of Particularly Vulnerable Tribal Groups (PVTGs) earlier known as Primitive Tribal Groups (PTGs) is
a) 35 ; b) 55; c) 75; d) 95
8. Sen (1976) proposed an index of poverty that considers
a) the number of poor only;
b) the number of poor and the depth of their poverty;
c) the number of poor, the depth of their poverty, and the distribution of poverty within the group;
d) none of these
9. The main points of the criticism of the concept of poverty line include a) application of the same poverty line in all the states, which imply the absence of price differentials across the states;
(b) use of a fixed consumption basket over time;
(c) uniform consumption basket for all the states;
d) all of these;
10. In which of the following years Asia's first EPZ set up in Kandla
a) 1965; b)1969; c) 1972; d) 1975
11. The Special Economic Zones Act was passed in
a)2000; b)2002; c)2005; d) 2007
12. Which of the following is not an objective of the SEZ Act?
(a) generation of additional revenue for the government;
(b) promotion of exports of goods and services;
(c) promotion of investment from domestic and foreign sources;
(d) creation of employment opportunities;
13. The inter-ministerial SEZ Board of Approval (BoA) consists of
a) 5 members; b) 10 members; c) 12 members; d) 19 members;
14. The incentives and facilities offered to the units in SEZs for attracting investments into the SEZs, including foreign investment does not include
a) Duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units
b) 100% Income Tax exemption on export income for SEZ units under Section 10AA of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years.
c) Exemption from minimum alternate tax under section 115JB of the Income Tax Act.
d) Borrowing from the commercial banks of the country by any SEZ unit upto US $ 500 million in a year without any collateral security.
15. In which of the following years exports from the SEZs recorded highest growth rate?
a) 2006-07; b) 2007-08; c)2008-09; d)2009-10;
16. India’s only SEZ specializing in animation and gaming is located at
a) Bengaluru; b) Trivandrum; c) Rajarhat; d) Gurgaon;
17. Moser Baer SEZ is located at
a) Mysore; b) Gurgaon; c) Greater Noida; d) Coimbatore;
18. Since independence, in how many years, inflation rate in India have been above 15 percent?
a) 22 ; b) 15; c)6; d)4;
19. The average inflation during 1951-2005 is estimated to be
a) 6.5%; b) 8.5%; c) 10.5%; d) 12.5%
20. Which of the following statements is not correct?
a) The “headline inflation” covers the entire set of goods and services included in the general index.
b) The “core inflation” otherwise known as “underlying inflation” ignores the volatile items in the general index.
c) Headline inflation reflects not only the effect of demand pressures but also supply shocks which impart transitory noise and bias to the index.
d) The concept of “core” inflation became popular much before the adoption of the “inflation targeting” framework by several central banks.
21. Inflation targeting as a framework for operating monetary policy has almost acquired a sort of cult status ever since _________ formulated it for the first time in early 1990s
a) Reserve Bank of India; b) Central Bank of Europe; c) Reserve Bank of New Zealand; d) None of these.
22. NAIRU stands for
a) Non-accelerating Inflation Rate of Unemployment; b) National Average of Industrial Rate of Unemployment; c) National All India Radio Union; d) None of these
23. The grant of money in aid or support to institutions which is asked to provide loans to farmers at below market rates by the government is known as
a) subvention b) subsidy c) monetization d) none of these
24. Which among the following facts about BRIC is/are true?
a)BRIC countries account for 42 percent of the world's population
b)BRIC Countries account for 14.6 percent of global Gross Domestic Product (GDP)
c)BRIC countries account for 12.8 percent of the global trade volume.
d) All are true
25.Recently Bindeshwar Pathak of Sulabh International was honored by Intergovernmental Renewable Energy Organization at the United Nations headquarters in New York . He was presented this honor for _________?
a) Running public toilets in India;
b) Developing low cost toilet technology to produce energy out of human excreta;
c) Uplifting the socio-economic and environmental status of poor;
d) For popularizing solar technology in the rural areas;
26. Reserve Bank constituted a Working Group to Review the Operating Procedure of Monetary Policy in India under the Chairmanship of
a) A. Vaidyanathan; b) Ashok Chawla; c) Deepak Mohanty; d) Dr. Rakesh Mohan
27. The Task Force on Revival of Rural Co-operative Credit Institutions set up by the RBI is headed by a) Prof. A. Vaidyanathan; b) Ashok Chawla; c) Dr. Rakesh Mohan; d) None of these
28. As per Monetary Policy Statement of RBI, Repo Rate has been increased to
a) 6.75%; b) 7.25%; c) 6%; d) None of these
29. What does MSME stand for?
a) Medium, Small and Micro Enterprises; b) Modern Small and Micro Enterprises; c) Micro, Small and Medium Enterprises; d) None of these
30. What does BCBS stand for?
a) Basel Committee on Banking Supervision; b) Broadbased Core Banking System; c) Business Class Banking Software; d) None of these

For Answers, visit this Blog on or after 21 May, 2011

ICSA 2011 GS Indian Econ Q & A Session--III, Dated 7 May, 2011

1. Using which of the following approaches NSSO collects data on employment and unemployment in India
(a) Usual Status; (b) Current Weekly Status; (c) Current Daily Status; (d) All of these
2. The proportion of the country’s population that is engaged actively in the labour market either by working or by seeking work is known as
(a) Work Participation Rate;
(b) Labour Force Participation Rate; (c) Unemployment Rate;
(d) None of these
3. Under Current Daily Status, a person is considered employed for the full day if he/she worked during the day for
(a) at least 8 hours; (b) at least 6 hours; (c) at least 4 hours; (d) None of these
4. In which of the following age groups, CDS unemployment rate of urban female was the highest
in 2004-2005
(a) 15-19 ; (b) 20-24 ; (c) 25-29; (d)30-34
5. Which of the following categories of workers are considered to be self-employed
a) Own account workers; b) Employers; c) Helpers; d) All of these.
6. As per NSSO estimate, the percentage of urban work force who were self-employed in 2004-05 is
a) 45.4 % ; b) 54.5%; c) 60.2%; d) 39.9%
7. What percentage of rural female workers is engaged in agriculture in 2004-05?
a) 66.2% b) 84.1% c) 81.4; d)71.2%
8. In which of the following states, the percentage of regular employment to total employment is less than 10%
a) Uttar Pradesh ; b) Himachal Pradesh; c) Madhya Pradesh; d) Andhra Pradesh
9. The labour productivity of Japan is approximately _____ times of that in India
a) 4 ; b) 6; c) 8 d) 12
10. Which of the following countries has the highest level of labour productivity ?
a) United Kingdom ; b) Australia; c) United States of America; d) Germany
11. Unorganised sector workers are covered by
(a) The Maternity Benefits Act, 1961; (b) The Payment of Gratuity Act, 1972; (c) The Employees’ State Insurance Act,1948; (d) None of these
12. As per NSSO estimate, the share of unorganised sector in total employment is
(a) 66% ; (b) 76%; (c) 84%; (d)94%
13. Match the columns:
Column A Column B
(A) Wall Street Crash (i) 2008
(B) Black Monday (ii) 2000
(C) Dot-com bubble (iii) 1987
(D) Stock Market Crash (iv) 1929
(a) A-i; B-ii; C-iii; D-iv; (b) A-iv; B-iii; C-ii; D-i; (c) A-ii; B-i; C-iv; D-iii; (d) A-iv; B-ii; C-iii; D-i;
14. Match the columns:


Column A Column B
(A) SSE Composite (i) Czech Republic
(B) Case 30 (ii) Pakistan
(C) KSE 100 (iii) Egypt
(D) PX Index (iv) China
(a) A-i; B-ii; C-iii; D-iv;
(b) A-iv; B-iii; C-ii; D-i;
(c) A-ii; B-i; C-iv; D-iii;
(d) A-iv; B-ii; C-iii; D-i;
15. SEBI headquarters is located at
(a) New Delhi; (b) Chennai; (c) Bengaluru; (d) Mumbai
16. Who was the first Chairman of SEBI?
(a) S.A.Dave; (b) G.V.Ramkrishna; (c)S.S.Nadkarni; (d) D.R.Mehta
17. The percentage of a year’s real GDP that must be forgone to reduce inflation by 1 percentage point is
known as
(a) Phillips Ratio; (b) GDP Deflator; (c) Sacrifice Ratio; (d) None of these
18. Major schemes in Elementary Education include
(a) Sarva Shiksha Abhiyan;
(b) Sarva Shiksha Abhiyan, Mid-Day Meals in Schools;
(c) Sarva Shiksha Abhiyan, Mid-Day Meals in Schools, Mahila Samakhya;
(d) Sarva Shiksha Abhiyan, Mid-Day Meals in Schools, Mahila Samakhya, Infrastructure Development in Minority Institutions;
19. Sarva Shiksha Abhiyan was launched in
(a) 2001-02; (b) 2000-01; (c) 1999-2000; (d) None of these
20. AIE stands for
(a) All India Education ; (b) Alternative and Innovative Education; (c) Appropriate Indian
English; (d) None of these
21. What was the national average dropout rate in 2007-08
(a) 43.03%; (b) 44.04%; (c) 45.05%; (d) 46.06%;
22. Rashtriya Madhyamik Shiksha Abhiyan (RMSA) is a major scheme launched in March, 2009 with the objectives of
(a) making secondary education of good quality available,
(b) accessible and affordable to all young persons in the age group 15-16 years,
(c) achieving a GER of 75 per cent in secondary education in a period of five years,
(d) all the above
23. "MARG Swarnabhoomi" is a mega infrastructure project with world class telecommunication facilities. MARG Limited (integrated infrastructure company) signed an MOU with which of the following India's telecommunication giants for this project ?
(a)Tata Indicom; (b)BSNL; (c) Bharti Airtel; (d) None of these
24. In which of the following states the World Bank-assisted National Cyclone Risk Management Project(NCRMP) is being implemented?
(a)West Bengal; (b) Orissa; (c)Andhra Pradesh; (d) Tamil Nadu;
25. Union Government has suggested all states in the country to adopt Water and Sanitation Management Organisation (WASMO) model for achieving drinking water security through community participation used by which state?
(a)Maharastra; (b) Gujarat; (c)Rajasthan; (d) West Bengal
26. Recently which Insurance company has launched a micro-insurance scheme 'Grameen Shakti' in the
Northeastern States?
(a)ICICI Prudential; (b)SBI Life Insurance; (c) LIC; (d) NIC
27. The Asian Development Bank (ADB) sanctioned a soft loan for khadi development in the country. What was the amount of the Loan?
(a)Rs. 750 crore; (b)Rs. 500 Crore; (c)Rs. 450 Crore; (d) Rs.200 Crore
28.Biocon Limited, India's pioneering biotechnology company, has recently launched the Biocon Cell for Innovation Management (BCIM) to promote innovation in business in which of the following Prestigious Business School of the country ?
(a)Indian Institute of Management , Ahmadabad; (b)Indian School of Business , Hyderabad; (c)Indian Institute of Foreign Trade , New Delhi; (d) None of these
29. "Harit Rajasthan' which is a flagship programme of Chief Minister of Rajasthan Ashok Gehlot is a scheme to _________?
(a) provide irrigation from canals to the desert areas of the state; (b) planting of saplings over vacant lands (c) hand pumps & tube well facilities in areas lacking drinking water; (d) none of these;
30. "Arogya Sri" is a Insurance coverage programme for poor people , under the aegis of the state government of ________?
(a) Gujarat ; (b) Andhra Pradesh; (c)Karnataka; (d) Jharkhand.

For Answers, visit this Blog on or after 21 May, 2011

ICSA 2011 GS Indian Economics Q&A Session—II, Dated April 9, 2011

1.What is the HDI ranking of India?
a)118; b)119; c)120; d)121;
2.The average annual growth rate of India’s HDI during 1980-2010 is
a)1.66; b)1.41; c)1.61;d)None of these
3.Which of the following Asian countries registered the highest average annual growth rate of HDI during 1980-2010 ?
a) Sri Lanka; b) Bangladesh; c) India; d) Pakistan;
4.The expenditure of central and state governments combined on education as percentage of total expenditure as per budget estimate of 2010-11 was
a) 11.3; b) 10.7; c) 10.3; d) None of these
5. The proportion of the households availing banking facilities is known as
a) Banking penetration ratio; b) Banking expansion ratio; c) Banking habit ratio;
d) Banking inclusion ratio;
6. GOI’s ‘New Initiatives for North Eastern Region’ was announced in
a)1990; b)1996; c)2000; d)2007;
7. The rate of growth of employment in the public sector during 1994-2008 was
a)0.05%;b)1.53%;c)-0.65%; d)-0.05%
8. Apart from IT/BPO, which sector registered highest increase in employment during September 2009-2010?
a)Metal; b)Gems and Jewellery; c)Textiles; d)Automobiles;
9. Which of the following states provided maximum employment under MGNREGS in 2009-10?
a) Andhra Pradesh; b) Madhya Pradesh; c) Uttar Pradesh; d) Rajasthan;
10.In which of the following states, the number of primary health centres under NRHM is maximum?
a)Tamil Nadu; b)Karnataka; c)Maharashtra; d)Andhra Pradesh;
11.Aam Admi Bima Yojana was launched on
a)2 October, 2009; b)2 October, 2008; c)2 October, 2007; d)2 October, 2006
12. Which of the following schemes seeks to promote sustainability of habitats through improvement in energy efficiency?
a) NMSHE; b) Green India Mission; c) NMSH; d) NMEEE;
13. Why should poverty be measured?
a) To be able to identify poor people and so to be able to target appropriate interventions;
b) To monitor and evaluate projects and policy interventions geared to poor people;
c) To evaluate the effectiveness of institutions whose goal is to help poor people;
d) All of these
14. Which of the following is not true about headcount index?
a) The headcount index does not take the intensity of poverty into account;
b) The headcount index does not change if people below the poverty line become poorer;
c)The headcount index indicates poverty for individuals, not households.
d) The headcount index measures the extent to which individuals on average fall below the poverty line, and expresses it as a percentage of the poverty line.
15. The idea of poverty line was first mooted by
a)Amartya Sen in 1969; b)Indian Labour Conference in 1957; c)NSSO in 1957;
d)ISI in 1967;
16. The poverty line in India was quantified for the first time by
a)Amartya Sen, 1969; b)P.D.Ojha, 1965; c) Working Group of the Planning Commission, 1962; d)P.K.Bardhan, 1967;
17. The Task Force on Projection of Minimum Needs and Effective Consumption Demand constituted by the Planning Commission in 1979 defined the poverty line as per capita consumption expenditure level meeting the average per capita daily calorie requirement of
a) 2400 kcal per capita per day in rural and urban areas; b) 2400 kcal per capita per day in rural areas and 2100 kcal per capita per day in urban areas; c) 2100 kcal per capita per day in rural and urban areas; d) 2100 kcal per capita per day in rural areas and
18. As per NSSO estimate, the percentage of people living below poverty line in 2004-05 was
a)26.1%; b)27.5%; c)29.2%; d)None of these
19. The main points of the criticism in respect of the poverty line include:
a) Application of the same poverty line in all the states, which imply the absence of price differentials across the states;
b) Use of a fixed consumption basket over time;
c) Uniform consumption basket for all the states;
d) All of these;
20. Which of the following types of programs unambiguously exemplify the direct approach for poverty alleviation
a) Employment programs aimed at providing wage employment for the poor;
b)Financial assistance programs aimed at generating additional income for the poor from self-employment;
c) Targeted programs aimed directly at increasing incomes of identified poverty groups;
d) All of these
21. Which of the following states is the best performer in respect of socio – economic development during 2002 – 2009?
a) Bihar; b) Himachal Pradesh; c) Haryana; d) Gujarat
22. As per NSSO terminology, UPS, a concept used in the estimation of unemployment, stands for
a) Uninterrupted Payment Status b) Usual Principal Status c) Usual Payment Status
d) None of these
23. In 2009-10 due to the poor monsoon throughout the country the primary sector registered a growth
a) + 0.2% b) +2% c) -0.2% d)-2%
24 ‘Sevottam’ is associated with
a)Ramakrishna Mission ; b)Income Tax dispute redressal; c)Air India; d)None of these;
25. Which of the following does not belong to a four-pronged strategy mooted in the Budget to spur growth in farm production :
a) Reduce wastages; b) Strengthen credit support to farmers; c) Lend a thrust to the food processing sector; d) Build multipurpose hydel project
26. India Infrastructure Finance Company Ltd was set up in 2008 as a wholly owned subsidiary of which of the following?
a) ICICI ; b) IDBI; c) HDFC; d) RBI
27. District Primary Education Programme (DPEP) was launched in
a)1994; b)2000 ; c)1990 ; d)1998
28.National Sample Survey Organisation (NSSO) was established in
a)1950; b) 1951; c) 1952;d) 1947;
29. Who is known as the 'Father of India's Green Revolution' in India?
a)Norman E Borlaug; b)M.S.Swaminathan; c)Gary Becker; d)None of these;
30. What does DFIA stand for?
a). Designated Free Import Authority; b). Duty Free International Airport;
c) Duty Free Import Authorisation; d) None of these

For Answers visit this Blog on or after 21 May, 2011

Thursday, May 19, 2011

Thanks to all of my students.

Thanks to all of my students for extending their cooperation in completing lecture sessions for IAS Prelims 2011. Wising you all success in the ensuing exam. Please visit this Blog regularly for updated information and study materials.In case of any further assistance, please don't hesitate to write to me.
SM

Wednesday, May 18, 2011

Right to Emergency Care - Supreme Court

Title : Right to Emergency Care - Supreme Court.
Date Of Judgment: 23/02/2007.
Case No.: Appeal (civil) 919 of 2007.
The Supreme Court has ruled that all injured persons especially in the case of road traffic accidents, assaults, etc., when brought to a hospital / medical centre, have to be offered first aid, stabilized and shifted to a higher centre / government centre if required.
It is only after this that the hospital can demand payment or complete police formalities.

In case you are a bystander and wish to help someone in an accident, please go ahead and do so.

Your responsibility ends as soon as you leave the person at the hospital. The hospital bears the responsibility of informing the police, first aid, etc.
Please do inform your family and friends about these basic rights so that we all know what to expect and what to do in the hour of need.
Please forward this message to everyone and save a life.

How poll promise affects the real sector--the Jayalalithaa way.....

Jayalalithaa creates Rs 350 crore opportunity for laptop makers
CHENNAI: The cadre and supporters of AIADMK were not the only ones cheering when J Jayalalithaa took her oath as chief minister of Tamil Nadu on Monday. Ripples of her victory over rival DMK were also felt in the corporate world where laptop manufacturers, sensing an opportunity in her triumph, were proposing a toast to the mercurial actor-turned-politician.

The reason for their broad grins was Jayalalithaa's campaign pledge to dole out free laptops to students of class XI and XII.

Considering that there are about 1.4 million students in the state eligible for this freebie, laptop-makers are looking at an order valued at between Rs 140 crore and Rs 350 crore from the state government.

"This is obviously a sizeable order, whenever it comes through," says S Rajendran, chief marketing officer of Acer India , a subsidiary of Taiwan's biggest computer maker. As if seeking to challenge competitors, Rajendran says his company has old ties with Tamil Nadu where it supplied laptops at subsidised rates to students in partnership with the government-promoted Electronics Corporation of Tamil Nadu.

Experts say an order of the size of 1.4 million units is unheard of in the computer hardware business. To put the figure in perspective, India sold a total of 2.5 million laptops and notebooks in 2009-10.

"Laptop is a sensitive electronic gadget," says Rothin Bhattacharyya, executive vice-president (marketing) at HCL Infosystems , which offers hardware as well as service support. "We hope the state government will consider factors like service support and energy efficiency before putting out a tender." "The market today is flooded with cheap Chinese laptops, which have poor a shelf-life," he says.

"We hope the government will keep in mind the interests of the local industry."

Industry observers say that despite its populist overtones, the laptop goodie will help in promoting e-literacy in the state.

They point to DMK's handout of free colour TVs to voters in 2006. Although the move cost the state exchequer about Rs 4,000 crore, television ownership in the state shot up from 60% in 2006 to 86% in 2010, according to Chennai-based Hansa Research. Satellite TV penetration rose from 53% to 90% over the period.

"The laptop scheme, if implemented, will surely improve IT penetration and literacy in the state," says Sandeep Nair, president, Manufacturers' Association for Information Technology. "It will also go a long way in creating IT-literate talent."
(By T V Mahalingam, ET Bureau | May 18, 2011, 11.38am IST)

Tuesday, May 17, 2011

Answer to the Question sent by Ripon Sarkar to IAS Study Room

With respect to hike in petroleum prices, as you said,the opposition parties have argued that "If the cess revenue earned by the government due to rise in international crude prices is returned to the oil companies, then there would be no need to hike prices and burden the aam aadmi". But there is a fallacy.
The market price of petrol consists of
Price of petrol at retail point= Cost of crude oil+Refinery cost+Cost of transport as crude and as refined oil+operating profits of oil marketing companies, including commission to petrol pump owners+central excise ad valorem+state VAT ad valorem+Cess of central and state governments,if any.
India imports nearly 80% of the crude oil it uses - more than 60% from the Middle East. The price of crude oil varies widely in the international market due to speculation. Although cost of crude oil is the most significant part of petrol price, taxes are no less significant. Taxes and cess contribute to nearly 40%--45% of market price of petrol. The state government gets the major portion of this tax revenue. They have never reduced this, except once in the early part of this year.

Taxes are not imposed on petrol prices in any developed country, except UK. But in India this is the most common and sure way to raise revenue.It is collected at the point of sale every day. Thus, there is a regular flow of revenue form the petroleum products.

Cess is additional taxes, imposed for a specific purpose, say for development of road. Thus this revenue can not be transferred to Oil companies. What state governments and central government can do is to reduce the the rate of advalorem tax,in proportion to rise in crude prices so as to keep market price of petrol unchanged. But this would mean a loss of revenue and that too in a uncertain way. This may affect budgetary process in a great way.
My opinion is taxes should not be fully removed but can be moderated. India should try to achieve a global consensus for a controlled speculation with crude price, with floor price and a ceiling price.

Got your answer? Satisfied? Please reply.

SM

Thursday, May 12, 2011

Non Banking Financial Companies

QUES -1 What is a Non-Banking Financial Company (NBFC)?

ANS -1 A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

QUES 2. NBFCs are doing functions similar to banks. What is difference between banks & NBFCs ?

ANS 2. NBFCs are doing functions akin to that of banks; however there are a few differences:

(i) an NBFC cannot accept demand deposits;

(ii) an NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself; and

(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks.

QUES-3. Is it necessary that every NBFC should be registered with RBI?

ANS 3. In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.

However, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or Housing Finance Companies regulated by National Housing Bank.

QUES 4. What are the different types of NBFCs registered with RBI?

ANS 4. Originally, NBFCs registered with RBI were classified as:

(i) equipment leasing company;
(ii) hire-purchase company;
(iii) loan company;
(iv) investment company.

However, with effect from December 6, 2006 the above NBFCs registered with RBI have been reclassified as

(i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)

AFC would be defined as any company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive/economic activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines. Principal business for this purpose is defined as aggregate of financing real/physical assets supporting economic activity and income arising therefrom is not less than 60% of its total assets and total income respectively.

The above type of companies may be further classified into those accepting deposits or those not accepting deposits.

QUES 5. Updated on February 10, 2009 What are the requirements / is the procedure for registration with RBI?

ANS 5. A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999).

The company is required to submit its application online by accessing RBI’s secured website https://secweb.rbi.org.in/COSMOS/rbilogin.do (the applicant companies do not need to log on to the COSMOS application and hence user ids for these companies are not required). The company has to click on “CLICK” for Company Registration on the login page. A window showing the Excel application forms available for download would be displayed. The company can then download suitable application form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the application form. The company may note to indicate the name of the correct Regional Office in the field “C-8” of the “Annx-Identification Particulars” worksheet of the Excel application form. The company would then get a Company Application Reference Number for the CoR application filed on-line. Thereafter, the company has to submit the hard copy of the application form (indicating the Company Application Reference Number of its on-line application), along with the supporting documents, to the concerned Regional Office. The company can then check the status of the application based on the acknowledgement number. The Bank would issue Certificate of Registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.

QUES 6. Where can one find list of Registered NBFCs and instructions issued to NBFCs?

ANS 6. The list of registered NBFCs is available on the web site of Reserve Bank of India and can be viewed at www.rbi.org.in. The instructions issued to NBFCs from time to time are also hosted at the above site. Besides, instructions are also issued through Official Gazette notifications. Press Release is also issued to draw attention of the public/NBFCs.

QUES 7. Can all NBFCs accept deposits and what are the requirements for accepting Public Deposits?

ANS 7. All NBFCs are not entitled to accept public deposits. Only those NBFCs holding a valid Certificate of Registration with authorisation to accept Public Deposits can accept/hold public deposits. NBFCs authorised to accept/hold public deposits besides having minimum stipulated Net Owned Fund (NOF) should also comply with the Directions such as investing part of the funds in liquid assets, maintain reserves, rating etc. issued by the Bank.

QUES 8. Is there any ceiling on acceptance of Public Deposits? What is the rate of interest and period of deposit which NBFCs can accept?

ANS 8. Yes, there is a ceiling on acceptance of Public Deposits. An NBFC maintaining required NOF/Capital to Risk Assets Ratio (CRAR) and complying with the prudential norms can accept public deposits as follows:
Category of NBFC having minimum
NOF of Rs 200 lakhs


Ceiling on public
deposit

AFC* maintaining CRAR of 15% without credit rating


AFC with CRAR of 12% and having minimum investment grade credit rating


1.5 times of NOF or Rs 10 crore whichever is less

4 times of NOF

LC/IC** with CRAR of 15% and having minimum investment grade credit rating


1.5 times of NOF

* AFC = Asset Finance Company

** LC/IC = Loan company/Investment Company

As has been notified on June 17, 2008 the ceiling on level of public deposits for NBFCs accepting deposits but not having minimum Net Owned Fund of Rs 200 lakh is revised as under:

Category of NBFC having NOF more
than Rs 25 lakh but less than Rs 200 lakh


Revised Ceiling on public deposits

AFCs maintaining CRAR of 15% without credit rating and


Equal to NOF

AFCs with CRAR of 12% and having minimum investment grade credit rating


1.5 times of NOF

LCs/ICs with CRAR of 15% and having minimum investment grade credit rating


Equal to NOF

Presently, the maximum rate of interest an NBFC can offer is 12.5%. The interest may be paid or compounded at rests not shorter than monthly rests.

The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.

The RNBCs have different norms for acceptance of deposits which are explained elsewhere in this booklet.

QUES 9. What are the salient features of NBFCs regulations which the depositor may note at the times of investment?

ANS 9. Some of the important regulations relating to acceptance of deposits by NBFCs are as under:

The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.
NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.
NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.
NBFCs (except certain AFCs) should have minimum investment grade credit rating.
The deposits with NBFCs are not insured.
The repayment of deposits by NBFCs is not guaranteed by RBI.
Certain mandatory disclosures are to be made about the company in the Application Form issued by the company soliciting deposits.

QUES 10. What is ‘deposit’ and ‘public deposit’? Is it defined anywhere?

ANS 10. The term ‘deposit’ is defined under Section 45 I(bb) of the RBI Act, 1934. ‘Deposit’ includes and shall be deemed always to have included any receipt of money by way of deposit or loan or in any other form but does not include:

amount raised by way of share capital, or contributed as capital by partners of a firm;
amount received from scheduled bank, co-operative bank, a banking company, State Financial Corporation, IDBI or any other institution specified by RBI;
amount received in ordinary course of business by way of security deposit, dealership deposit, earnest money, advance against orders for goods, properties or services;
amount received by a registered money lender other than a body corporate;
amount received by way of subscriptions in respect of a ‘Chit’.

Paragraph 2(1)(xii) of the Non-Banking Financial Companies Acceptance of Public Deposits ( Reserve Bank) Directions, 1998 defines a ‘ public deposit’ as a ‘deposit’ as defined under Section 45 I(bb) of the RBI Act, 1934 and further excludes the following:

amount received from the Central/State Government or any other source where repayment is guaranteed by Central/State Government or any amount received from local authority or foreign government or any foreign citizen/authority/person;
any amount received from financial institutions;
any amount received from other company as inter-corporate deposit;
amount received by way of subscriptions to shares, stock, bonds or debentures pending allotment or by way of calls in advance if such amount is not repayable to the members under the articles of association of the company;
amount received from shareholders by private company;
amount received from directors or relative of the director of an NBFC;
amount raised by issue of bonds or debentures secured by mortgage of any immovable property or other asset of the company subject to conditions;
the amount brought in by the promoters by way of unsecured loan;
amount received from a mutual fund;
any amount received as hybrid debt or subordinated debt;
any amount received by issuance of Commercial Paper.

Thus, the directions exclude from the definition of public deposit, amount raised from certain set of informed lenders who can make independent decision.

QUES 11. Are Secured debentures treated as Public Deposit? If not who regulates them?

ANS 11. Debentures secured by the mortgage of any immovable property or other asset of the company, if the amount raised does not exceed the market value of the said immovable property or other asset, are excluded from the definition of ‘Public Deposit’ in terms of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998. Secured debentures are debt instruments and are regulated by Securities & Exchange Board of India.

QUES 12. Whether NBFCs can accept deposits from NRIs?

ANS 12. Effective from April 24, 2004, NBFCs cannot accept deposits from NRIs except deposits by debit to NRO account of NRI provided such amount does not represent inward remittance or transfer from NRE/FCNR (B) account. However, the existing NRI deposits can be renewed.

QUES 13 Is nomination facility available to the Depositors of NBFCs?

ANS 13. Yes, nomination facility is available to the depositors of NBFCs. The Rules for nomination facility are provided for in section 45QB of the Reserve Bank of India Act, 1934. Non-Banking Financial Companies have been advised to adopt the Banking Companies (Nomination) Rules, 1985 made under Section 45ZA of the Banking Regulation Act, 1949. Accordingly, depositor/s of NBFCs are permitted to nominate one person to whom the NBFC can return the deposit in the event of the death of the depositor/s. NBFCs are advised to accept nominations made by the depositors in the form similar to one specified under the said rules, viz Form DA 1 for the purpose of nomination, and Form DA2 and DA3 for cancellation of nomination and change of nomination respectively.

QUES 14. What else should a depositor bear in mind while depositing money with NBFCs?

ANS 14. While making deposits with an NBFC, the following aspects should be borne in mind:

(i) Public deposits are unsecured.

(ii) A proper deposit receipt which should, besides the name of the depositor/s, state the date of deposit, the amount in words and figures, rate of interest payable and the date of maturity. Depositor/s should insist on the above and also ensure that the receipt is duly signed by an officer authorised by the company in that behalf.

(iii) The Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

QUES 15. It is said that rating of NBFCs is necessary before it accepts deposit? Is it true? Who rates them?

ANS 15. An unrated NBFC, except certain Asset Finance companies (AFC), cannot accept public deposits. An exception is made in case of unrated AFC companies with CRAR of 15% which can accept public deposit without having a credit rating upto a certain ceiling depending upon its Net Owned Funds (c.f Ans to Q 8). AN NBFC may get itself rated by any of the four rating agencies namely, CRISIL, CARE, ICRA and FITCH Ratings India Pvt. Ltd.

QUES 16. What are the symbols of minimum investment grade rating of different companies?

ANS 16. The symbols of minimum investment grade rating of the Credit rating agencies are:
Name of rating agencies


Nomenclature of minimum investment
grade credit rating (MIGR)

CRISIL


FA- (FA MINUS)

ICRA


MA- (MA MINUS)

CARE


CARE BBB (FD)

FITCH Ratings India Pvt. Ltd.


tA-(ind)(FD)

It may be added that A- is not equivalent to A, AA- is not equivalent to AA and AAA- is not equivalent to AAA.

QUES 17. Can an NBFC which is yet to be rated accept public deposit?

ANS 17. No, an NBFC cannot accept deposit without rating (except an Asset Finance Company complying with prudential norms and having CRAR of 15%, as explained above at Ans. to Q 8).

QUES 18. When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time?

ANS 18. If rating of an NBFC is downgraded to below minimum investment grade rating, it has to stop accepting public deposit, report the position within fifteen working days to the RBI and reduce within three years from the date of such downgrading of credit rating, the amount of excess public deposit to nil or to the appropriate extent permissible under paragraph 4(4) of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

QUES 19. In case an NBFC defaults in repayment of deposit what course of action can be taken by depositors?

ANS 19. If an NBFC defaults in repayment of deposit, the depositor can approach Company Law Board or Consumer Forum or file a civil suit in a court of law to recover the deposits.

QUES 20. What is the role of Company Law Board in protecting the interest of depositors? How one can approach it?

ANS 20. Where an NBFC fails to repay any deposit or part thereof in accordance with the terms and conditions of such deposit, the Company Law Board (CLB) either on its own motion or on an application from the depositor, directs by order the non-banking financial company to make repayment of such deposit or part thereof forthwith or within such time and subject to such conditions as may be specified in the order.

As explained above, the depositor can approach CLB by mailing an application in prescribed form to the appropriate bench of the Company Law Board according to its territorial jurisdiction alongwith the prescribed fee.

QUES 21. Can you give the addresses of the various benches of the Company Law Board (CLB) indicating their respective jurisdiction?

ANS 21. The details of addresses and territorial jurisdiction of the bench officers of CLB are as under:

Sr.No.


Addresses


Territorial Jurisdiction

1.


Bench Officer, Company Law Board,
Northern Region Bench,
Shastri Bhavan, ‘A’ Wing, 5th Floor,
Dr. Rajendra Prasad Road,
New Delhi 110 001.


Uttar Pradesh, Jammu & Kashmir, Punjab, Himachal Pradesh, Rajasthan, Haryana and Union Territories of Chandigarh and Delhi

2.


Bench Officer, Company Law Board,
Southern Region Bench,
Shastri Bhavan, ‘A’ Wing, 5th Floor,
Block 8, No 26, Haddows Road,
Chennai 600 006.


Tamil Nadu, Andhra Pradesh, Kerala, Karnataka, Union Territories of Amindivi, Minicoy and Lakshadweep Islands and Pondicherry

3.


Bench Officer, Company Law Board,
Western Region Bench,
2nd Floor, N.T.C. House,
15, Narottam Morarjee Marg,
Ballard Estate,
Mumbai-400 038.


Maharashtra, Gujarat, Madhya Pradesh, Goa and Union Territories of Dadra & Nagar Haveli, Daman and Diu.

4.


Bench Officer, Company Law Board,
Eastern Region Bench,
9, Old Post Office Street,
6th Floor,
Kolkata 700 001.


West Bengal, Orissa, Bihar, Assam, Tripura, Manipur, Nagaland, Meghalaya, Arunachal Pradesh, Mizoram, Union Territories of Andaman and Nicobar Islands.

5.


Bench Officer, Company Law Board,
Principal Bench at New Delhi, Shastri Bhavan, ‘A’ Wing, 5th Floor, Dr. Rajendra Prasad Road,
New Delhi 110 001.


All Principal Bench matters all over India.

QUES 22. We hear that in a number of cases official liquidators have been appointed on the defaulting NBFCs. What is their role and how one can approach them?

ANS 22. Official Liquidator is appointed by the court after giving the company reasonable opportunity of being heard in a winding up petition. The liquidator performs duties of winding up and such duties in reference thereto as the court may impose.
Where the court has appointed an official liquidator or provisional liquidator, he becomes custodian of the property of the company and runs the day-to-day affairs of the company. He has to draw up a statement of affairs of the company in prescribed form containing particulars of assets of the company, its debts and liabilities, names/residences/occupations of its creditors, the debts due to the company and such other information as may be prescribed. The scheme is drawn up by the liquidator and same is put up to the court for approval. The liquidator realizes the assets of the company and arranges to repay the creditors according to the scheme approved by the court. The liquidator generally inserts advertisement in the newspaper inviting claims from depositors/investors in compliance with court orders. Therefore, the investors/depositors should file the claims within due time as per such notices of the liquidator. The Reserve Bank also provides assistance to the depositors in furnishing addresses of the official liquidator.

QUES 23. Consumer Court play useful role in attending to depositors problems. Can one approach Consumer Forum, Civil Court, CLB simultaneously?

ANS 23. Yes, a depositor can approach any or all of the redressal authorities i.e consumer forum, court or CLB.

QUES 24. Is there an Ombudsman for hearing complaints against NBFCs?

ANS 24. No, there is no Ombudsman for hearing complaints against NBFCs. However, in respect of credit card operations of an NBFC, if a complainant does not get satisfactory response from the NBFC within a maximum period of thirty (30) days from the date of lodging the complaint, the customer will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievance/s.

QUES 25. What are various prudential regulations applicable to NBFCs?

ANS 25. The Bank has issued detailed directions on prudential norms, vide Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998. The directions interalia, prescribe guidelines on income recognition, asset classification and provisioning requirements applicable to NBFCs, exposure norms, constitution of audit committee, disclosures in the balance sheet, requirement of capital adequacy, restrictions on investments in land and building and unquoted shares.

QUES 26. Please explain the terms ‘owned fund’ and ‘net owned fund’ in relation to NBFCs?

ANS 26. ‘Owned Fund’ means aggregate of the paid-up equity capital and free reserves as disclosed in the latest balance sheet of the company after deducting therefrom accumulated balance of loss, deferred revenue expenditure and other intangible assets.
'Net Owned Fund' is the amount as arrived at above minus the amount of investments of such company in shares of its subsidiaries, companies in the same group and all other NBFCs and the book value of debentures, bonds, outstanding loans and advances made to and deposits with subsidiaries and companies in the same group, to the extent it exceeds 10% of the owned fund.

QUES 27. What are the responsibilities of the NBFCs accepting/holding public deposits with regard to submission of Returns and other information to RBI?

ANS 27. The NBFCs accepting public deposits should furnish to RBI

Audited balance sheet of each financial year and an audited profit and loss account in respect of that year as passed in the annual general meeting together with a copy of the report of the Board of Directors and a copy of the report and the notes on accounts furnished by its Auditors;
Statutory Annual Return on deposits - NBS 1;
Certificate from the Auditors that the company is in a position to repay the deposits as and when the claims arise;
Quarterly Return on liquid assets;
Half-yearly Return on prudential norms;
Half-yearly ALM Returns by companies having public deposits of Rs. 20 crore and above or with assets of Rs. 100 crore and above irrespective of the size of deposits ;
Monthly return on exposure to capital market by companies having public deposits of Rs. 50 crore and above; and
A copy of the Credit Rating obtained once a year along with one of the Half-yearly Returns on prudential norms as at (v) above.

QUES 28. What are the documents or the compliance required to be submitted to the Reserve Bank of India by the NBFCs not accepting/holding public deposits?

ANS 28. The NBFCs having assets of Rs. 100 crore and above but not accepting public deposits are required to submit a Monthly Return on important financial parameters of the company. All companies not accepting public deposits have to pass a board resolution to the effect that they have neither accepted public deposit nor would accept any public deposit during the year.

However, all the NBFCs (other than those exempted) are required to be registered with RBI and also make sure that they continue to be eligible to retain the Registration. Further, all NBFCs (including non-deposit taking) should submit a certificate from their Statutory Auditors every year to the effect that they continue to undertake the business of NBFI requiring holding of CoR under Section 45-IA of the RBI Act, 1934.

RBI has powers to cause Inspection of the books of any company and call for any other information about its business activities. For this purpose, the NBFC is required to furnish the information in respect of any change in the composition of its Board of Directors, address of the company and its Directors and the name/s and official designations of its principal officers and the name and office address of its Auditors. With effect from April 1, 2007, non-deposit taking NBFCs with assets of Rs 100 crore and above were advised to maintain minimum CRAR of 10% and also comply with single/group exposure norms. The companies have to achieve CRAR of 12% by March 31, 2009 and 15% by March 31, 2010.

QUES 29. The NBFCs have been made liable to pay interest on the overdue matured deposits if the company has not been able to repay the matured public deposits on receipt of a claim from the depositor. Please elaborate the provisions.

ANS 29. As per Reserve Bank’s Directions, overdue interest is payable to the depositors in case the company has delayed the repayment of matured deposits, and such interest is payable from the date of receipt of such claim by the company or the date of maturity of the deposit whichever is later, till the date of actual payment. If the depositor has lodged his claim after the date of maturity, the company would be liable to pay interest for the period from the date of claim till the date of repayment. For the period between the date of maturity and the date of claim it is the discretion of the company to pay interest.

QUES 30. Can a company pre-pay its public deposits?

ANS 30. AN NBFC accepts deposits under a mutual contract with its depositors. In case a depositor requests for pre-mature payment, Reserve Bank of India has prescribed Regulations for such an eventuality in the Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 wherein it is specified that NBFCs cannot grant any loan against a public deposit or make premature repayment of a public deposit within a period of three months (lock-in period) from the date of its acceptance. However, in the event of death of a depositor, the company may, even within the lock-in period, repay the deposit at the request of the joint holders with survivor clause / nominee / legal heir only against submission of relevant proof, to the satisfaction of the company.

An NBFC subject to above provisions, which is not a problem company, may permit after the lock–in period, premature repayment of a public deposit at its sole discretion, at the rate of interest prescribed by the Bank.

A problem NBFC is prohibited from making premature repayment of any deposits or granting any loan against public deposit/deposits, as the case may be. The prohibition shall not, however, apply in the case of death of depositor or repayment of tiny deposits i.e. up to Rs. 10000/- subject to lock in period of 3 months in the latter case.

QUES 31. What is the liquid asset requirement for the deposit taking companies? Where these assets are kept? Do depositors have any claims on them?

ANS 31. In terms of Section 45-IB of the RBI Act, 1934, the minimum level of liquid asset to be maintained by NBFCs is 15 per cent of public deposits outstanding as on the last working day of the second preceding quarter. Of the 15%, NBFCs are required to invest not less than ten percent in approved securities and the remaining 5% can be in unencumbered term deposits with any scheduled commercial bank. Thus, the liquid assets may consist of Government securities, Government guaranteed bonds and term deposits with any scheduled commercial bank.

The investment in Government securities should be in dematerialised form which can be maintained in Constituents’ Subsidiary General Ledger (CSGL) Account with a scheduled commercial bank (SCB) / Stock Holding Corporation of India Limited (SHICL). In case of Government guaranteed bonds the same may be kept in dematerialised form with SCB/SHCIL or in a dematerialised account with depositories [National Securities Depository Ltd. (NSDL)/Central Depository Services (India) Ltd. (CDSL)] through a depository participant registered with Securities & Exchange Board of India (SEBI). However in case there are Government bonds which are in physical form the same may be kept in safe custody of SCB/SHCIL.

NBFCs have been directed to maintain the mandated liquid asset securities in a dematerialised form with the entities stated above at a place where the registered office of the company is situated. However, if an NBFC intends to entrust the securities at a place other than the place at which its registered office is located, it may do so after obtaining the permission of RBI in writing. It may be noted that liquid assets in approved securities will have to be maintained in dematerialised form only.

The liquid assets maintained as above are to be utilised for payment of claims of depositors. However, deposit being unsecured in nature, depositors do not have direct claim on liquid assets.

QUES 32. Please tell us something about the companies which are NBFCs, but are exempted from registration?

ANS 32. Housing Finance Companies, Merchant Banking Companies, Stock Exchanges, Companies engaged in the business of stock-broking/sub-broking, Venture Capital Fund Companies, Nidhi Companies, Insurance companies and Chit Fund Companies are NBFCs but they have been exempted from the requirement of registration under Section 45-IA of the RBI Act, 1934 subject to certain conditions.

Housing Finance Companies are regulated by National Housing Bank, Merchant Banker/Venture Capital Fund Company/stock-exchanges/stock brokers/sub-brokers are regulated by Securities and Exchange Board of India, and Insurance companies are regulated by Insurance Regulatory and Development Authority. Similarly, Chit Fund Companies are regulated by the respective State Governments and Nidhi Companies are regulated by Ministry of Corporate Affairs, Government of India.

It may also be mentioned that Mortgage Guarantee Companies have been notified as Non-Banking Financial Companies under Section 45 I(f)(iii) of the RBI Act, 1934.

QUES 33. There are some entities (not companies) which carry on activities like that of NBFCs. Are they allowed to take deposits? Who regulates them?

ANS 33. Any person who is an individual or a firm or unincorporated association of individuals cannot accept deposits except by way of loan from relatives, if his/its business wholly or partly includes loan, investment, hire-purchase or leasing activity or principal business is that of receiving of deposits under any scheme or arrangement or in any manner or lending in any manner.

QUES 34. What is a Residuary Non-Banking Company (RNBC)? In what way it is different from other NBFCs?

ANS 34. Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being Investment, Asset Financing, Loan Company. These companies are required to maintain investments as per directions of RBI, in addition to liquid assets. The functioning of these companies is different from those of NBFCs in terms of method of mobilisation of deposits and requirement of deployment of depositors' funds as per Directions. Besides, Prudential Norms Directions are applicable to these companies also.

QUES 35. We understand that there is no ceiling on raising of deposits by RNBCs, then how safe is deposit with them?

ANS 35. It is true that there is no ceiling on raising of deposits by RNBCs but every RNBC has to ensure that the amounts deposited and investments made by the company are not less than the aggregate amount of liabilities to the depositors.

To secure the interest of depositor, such companies are required to invest in a portfolio comprising of highly liquid and secure instruments viz. Central/State Government securities, fixed deposits with scheduled commercial banks (SCB), Certificate of deposits of SCB/FIs, units of Mutual Funds, etc.

QUES 36. Can RNBC forfeit deposit if deposit installments are not paid regularly or discontinued?

ANS 36. No Residuary Non-Banking Company shall forfeit any amount deposited by the depositor, or any interest, premium, bonus or other advantage accrued thereon.

QUES 37. Please tell us something on rate of interest payable by RNBCs on deposits and maturity period of deposits?

ANS 37. The amount payable by way of interest, premium, bonus or other advantage, by whatever name called by a RNBC in respect of deposits received shall not be less than the amount calculated at the rate of 5% (to be compounded annually) on the amount deposited in lump sum or at monthly or longer intervals; and at the rate of 3.5% (to be compounded annually) on the amount deposited under daily deposit scheme. Further, a RNBC can accept deposits for a minimum period of 12 months and maximum period of 84 months from the date of receipt of such deposit. They cannot accept deposits repayable on demand.

Wednesday, May 11, 2011

UPSC results: Chennai-based girl tops Civil Services exam

NEW DELHI: Chennai-based law graduate S Divyadharshini has topped the prestigious Civil Services Examination 2010 for which the results were announced today.

The second position was also secured by a woman, Sweta Mohanty, a computer engineer, while R V Varun Kumar, a dentist from Chennai, got the third rank.

A total of 920 candidates, including 203 women, have been selected for the Civil Services, which attracts the largest number of candidates from the entire length and breadth of the country.

Divyadharshini, who has done BA, BL (Hons) from Dr Ambedkar Law University in Chennai, cleared the exam in her second attempt. Mohanty cleared the exam in her third attempt.

Kumar, the topper among men, has done his BDS from Ragas Dental College in Chennai. This is his third attempt.

An elated Divyadharshini said she was surprised to find herself topping the exam as she was not expecting it. "I was expecting some result but not as a topper," she said.

As congratulatory messages poured in, she said the achievement was the result of "tedious" exercise and hard work of one year coupled with luck.

The top 25 candidates consist of 20 men and five women -- 15 of whom are engineers, five belonging to Commerce, Management, Humanities, Science and Social Sciences; and five belonging to medical science background.

Of the top 25, eight have made to the merit list in their first attempt while four made it in their second attempt, nine in third attempt, three in fourth attempt and one in fifth attempt.

Among those selected, 28 are physically challenged candidates while 14 are orthopaedically challenged, five visually impaired and nine hearing impaired.

A total number of 5,47,698 candidates applied for this examination and 2,69,036 candidates appeared for Preliminary examination, which was conducted on May 23, 2010.

12,491 candidates qualified for the main written examination held in October- November 2010.

2,589 candidates were shortlisted for the personality test conducted in March-April 2011 out of which 920 were selected.

They have been recommended for appointment including 428 General (including 19 Physically Challenged), 270 OBCs (including 8 Physically Challenged candidates), 148 Scheduled Castes (including one Physically Challenged candidate) and 74 Scheduled Tribes candidates.

There are 151 vacancies in IAS, 35 vacancies in IFS and 150 in IPS. (Source:TOI)

Civil Service 2011 Final Results are out

Two of my students have been selected. Congratulations to them.

Rank-418 Roll No.-078667 Name-HARSSH A PODDAR
Rank-768 Roll No.-112016 Nmae-APARAJITA RAI

Saturday, May 7, 2011

Effective Food Security

Yoginder K. Alagh : Wed Apr 27 2011,New Delhi:

The Food Security debate seemed almost closed with the PMEAC and the NAC both deciding on a coverage of around two thirds of the population. Some outliers like me accepted the need of wide coverage but argued both in the Express papers and the technical literature for a program targeted at the malnourished and were scared that a non targeted program could in fact lead to the really needy getting excluded as at present. Seeing that the outcome was decided I argued tongue in cheek in the group’s business paper for a cash subsidy program since it couldn’t be less effective than the present program. But the courts have opened very elegantly the discussion on targeting again and simultaneously a paper by Himanshu and Abhijit Sen has outlined the arguments we have been making in this column and the technical literature.

Shorn of the academic part the Himanshu-Sen paper argues for universal coverage so that the really needy are not excluded. We have in criticizing the relevance of the Official Poverty Line which incidentally originated in a Task Force we had chaired but which is no longer of relevance, also said that it should be substituted by a multi layered approach which captures the commitment to the definition of an aam admi. The State level practice of deprivation points was a step in this direction but needed validation by a central policy group which did not have the six minutes of dissent that a BPL Committee report on the subject contained.

Ads by Google Buy Apartment in Calicut 2BHK/3BHK Apts @ TC-One SkyWalk. Modern Facilities. Enquire Today!www.tconeproperties.ICICI Health Insurance Health Insurance for Entire Family. Pre & Post-Hospitalisation Covered.ICICILombard.com/HeaAll-New Ford Fiesta Sedan Advanced Blue-tooth voice control Voice controlled Auto ACIndia.Ford.com/All-N

Entitlements to subsidies however would have to be more strictly decided. Himanshu and Sen suggest that a priority group identified on the basis of verifiable inclusion criteria will pay only Re.1 for kg of millets,Rs.2 per kg of wheat and Rs.3 per kg of rice for an entitlement of 7 kgs of grain which everyone will have. A second group using again exclusion criteria will get half that amount of grain i.e. three and half kg. The remaining will get grain at three quarters the MSP which means very few people would use that right. For the priority group this column has argued for coverage of the severely and chronically malnourished and pointed out the correlates of this group for identification. The chronically malnourished would be lower but the chronically and severely malnourished would be around 22% of the population. Sen and Himanshu say that the ‘priority group is likely to cover only about 20% of the population that is either disabled or destitute or identifiably deprived on multiple dimensions.’ We have been suggesting free food as for destitute, women headed households and the handicapped, pregnant and lactating mothers in such families and the girl child in deprived sections of society in school. The NAC has also correctly identified a similar group. A notional charge of the kind suggested by Himanshu and Sen would only be an identification characteristic.

Sen and Himanshu make the important point that the need to universalize the entitlements is not just to entitle families to cheap grain. They recognize that large number of families which may thus be entitled will not purchase and consume the grain they are entitled to. But this approach will solve the access issue. Restricting numbers they point out ‘reduces access and not the leakage ratio. It is more important to allow wide access, monitor actual PDS participation and allocate supplies accordingly.’ They are therefore in favor of a ‘self selection process.’ This is the point we have been emphasizing with monotonous regularity. The trouble with the Tendulkar poverty Line is not that it is new. We have been saying now for two decades that the Official Poverty Line developed by us in the Seventies should be junked. The Tendulkar Poverty Line by adopting the urban poverty line of the old poverty line as the national poverty line as the new line creates more problems than solving them. You cannot follow the Tendulkar Poverty Line as a cap for a score based ranking Sen and Himanshu tell us because it will be a variant of the existing system and that will excludes the really needy, a point the courts now emphasize.

Wider access, but limited entitlements and more severely limited subsidies aimed at the really needy are the answer and the debate is again open, we hope for a more effective solution to India’s real problem. (Indian Express)

wbcsstudymat.blogspot.com has been updated--Visit now

wbcsstudymat.blogspot.com has been updated--Visit now

Visit wbcsstudymat.blogspot.com regularly for updated information

Visit wbcsstudymat.blogspot.com regularly for updated information