Raghuram Rajan warns of another global financial crisis..........

Reserve Bank of India Governor Raghuram Rajan has warned that the world economy could be heading towards a crash much like the Great Depression of the 1930s as advanced countries in a bid to pull out of the global downturn are working at cross purposes.

He advocated greater coordination between the central banks of these countries so as to avert a replay of the 2008 financial crisis that the collapse of Wall Street firm Lehman Brothers had triggered and from which the global economy is yet to fully recover.

As was the case in the 1930s, the lack of coordination between central banks across the world is producing spillovers that may be difficult to control and could plunge the world’s financial system into another crisis, Dr. Rajan said in an interview to the Central Banking Journal on Wednesday.

Dr. Rajan, a former chief economist of the International Monetary Fund, had famously predicted the 2008 global meltdown.

“We are taking a greater chance of having another crash at a time when the world is less capable of bearing the cost,” he told the journal. Whereas countries had previously competed with one another to devalue their currencies to spur economic recovery, the favoured tool now is monetary easing, he said. One symptom of the imbalances in the world’s financial market is the over valuation of the euro in contrast to the Euro zone’s economic standing, he said.

The European Central Bank’s “very, very accommodative stance” is getting blunted by the ultra-loose monetary policies being pursued by other central banks, including the Federal Reserve, the Bank of Japan and the Bank of England.

Dr. Rajan also warned that there could be sudden build ups of risk in the global financial system that might not be possible for economists to predict in time.

He cautioned of a repeat of the major market volatility seen in the aftermath of the Lehman collapse if investors who are chasing higher returns made possible by the loose monetary policies all exit their investments and positions at the same time.

To safeguard against such an eventuality, all central banks must unwind their monetary policies in a coordinated fashion, Dr. Rajan recommended.

All central banks must unwind their monetary policies in a coordinated fashion

— Raghuram Rajan

Governor, RBI

Based on The Hindu

GA Team,

Mahendra Educational Pvt. Ltd.

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What Is IFSC ?

                                  INDIAN FINANCIAL SYSTEM CODE

IFSC is an alpha-numeric code that uniquely identifies a bank-branch participating in  the NEFT system.
This is an 11 characters code.
FIRST 4th  alpha characters representing --- BANK NAME
The 5th characters is --- ZERO
The last 6th characters representing --- BRANCH CODE

In future when the number of branches increase, zero will be replaced an other numbers for providing branch code.

GA Team
Mahendra Educational PVT. LTD.

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Green signal for FDI in railway infrastructure

FDI is now allowed in all areas of Railways, except operations

Ahead of Prime Minister Narendra Modi’s visit to the US, the Cabinet has cleared a proposal to allow 100 per cent foreign direct investment (FDI) in Indian Railways. Two American companies — GE and EMD — have been shortlisted for a proposed diesel locomotive factory to be built in Bihar.
Now, except for Indian Railways’ operations, FDI can be brought into all special purpose vehicles, companies and joint ventures as an equity infusion, explained sources.
The existing Department of Industrial Policy & Promotion (DIPP) rules do not permit FDI in the railways.
Railway Minister Sadananda Gowda is likely to introduce a Bill in Parliament to amend the Railways Act, on Thursday.
With this policy change, FDI can be brought into high-speed train systems, freight terminals, building of rail links, electrification and signalling systems. A notification will have to be issued for the exact terms and conditions.
The policy change will also permit investments in manufacturing, construction and maintenance, spread over 20-30 years. There are already private investments in rail-based industries such as metro coaches, wagons and wheel manufacturing units.
FDI will also be allowed in suburban corridors and dedicated freight lines that are to be executed under the public-private partnership mode.
Strategic clearance
The Home Ministry had expressed concern that there might be security-related issues for projects in strategic border areas. For such projects, prior permission of the Foreign Investment Promotion Board and clearance from the Home Ministry may be required, an official said.
The Home Ministry has assured the DIPP that it will take a decision on strategic clearance for specific FDI proposals within three months.
Though India is looking at attracting equity investments through the FDI route, Japan, which is interested in providing technology support for bullet trains, has said that it may not opt for the equity funding route.

Based on businessline
GA Team
Mahendra Educational PVT LTD

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SEBI gets powers to clamp down on fraudulent deposit schemes

Lok Sabha passes Securities Laws Bill

Finance Minister Arun Jaitley

 

The Securities and Exchange Board of India (SEBI) will now have explicit powers to disgorge — recover — the illegal gains made through fraudulent deposit schemes and capital market offences. The assets recovered will be paid back by the market regulator to people who had lost their money in such schemes.

The Securities Laws (amendment) Bill, 2014, which was approved unanimously by the Lok Sabha on Wednesday, allows SEBI to issue disgorgement orders.

SEBI, in its little over two decades of existence, has issued disgorgement orders only on two occasions; once, in 2006, during the IPO irregularities issue, and for the second time in the Satyam Computer scandal.

The money collected will now be parked in SEBI’s Investor Protection and Education Fund.

This fund should not be confused with the Investor Education and Protection Fund that has been set up under the company law, Finance Minister Arun Jaitley clarified during a parliamentary discussion on the Bill.

“They are two separate funds. The IEPF under SEBI will have disgorged monies from the regulator’s directions. The other investor protection fund maintained under the company law is mainly unclaimed dividends,” Jaitley said.

Currently, the Fund under the company law has a corpus of about Rs. 830 crore.

Over the last one year — since the promulgation of an ordinance to initiate action against illegal deposit-taking schemes — the IEPF under SEBI has garnered a corpus of Rs. 30 crore.

“This move to explicitly empower SEBI to issue disgorgement orders is a big thing and augurs well for investor protection. So far, SEBI saw it only as an implicit power. Now that it will be explicit, SEBI will, in all its actions, first look at the possibility of disgorgement from the offenders,” MS Sahoo, Secretary, Institute of Company Secretaries of India, told BusinessLine .

Financial inclusion

Jaitley also said that Prime Minister Narendra Modi will, in the next few days, announce a financial inclusion project that would seek to open two bank accounts in each of the 7.5 crore families identified for the exercise.

Once a financial inclusion project of this dimension is launched, the attraction of Ponzi schemes will come down, he added.

Based on businessline

GA Team

mahendra educational pvt ltd

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Sierra Leone declares emergency

Medecins sans Frontieres (MSF) staff put on their protective gear before entering an isolation area at the ebola treatment centre in Kailahun, Sierra Leone.— File Photo: Reuters

Sierra Leone leader Ernest Bai Koroma declared a state of emergency on Thursday as the country struggled to contain the deadly ebola epidemic.

The impoverished country, along with neighbouring Guinea and Liberia, is struggling to contain an epidemic that has infected 1,200 people and left 672 dead across the region since the start of the year.

“Extraordinary challenges require extraordinary measures. The ebola virus disease poses an extraordinary challenge to our nation,” Mr. Koroma said in a televised address to the nation.

“Consequently... I hereby proclaim a state of public emergency to enable us to take a more robust approach to deal with the ebola outbreak.”

Mr. Koroma said he had cancelled a trip to a summit of around 50 African leaders in Washington DC next week.

He announced however that he would travel to neighbouring Guinea for a regional summit on the crisis gathering the heads of Sierra Leone, Liberia, Guinea and Ivory Coast. Mr. Koroma announced a raft of measures as part of the state of emergency, including quarantining ebola-hit areas and deploying security forces to protect medical workers. He banned all public meetings not related to ebola and cancelled foreign trips by ministers and other government officials, exempting only “absolutely essential engagements.”

The President said the measures would be in place initially for 60 to 90 days, and then be reassessed.

Fears that the outbreak could spread to other continents have been growing with European and Asian countries on alert.

Leading medical charity Doctors Without Borders warned the crisis would only get worse and said there was no overarching strategy to handle the world’s worst-ever outbreak of the disease.

Sierra Leone’s announcement comes a day after Liberia, which has seen 129 deaths, said it was shutting all schools and placing “non-essential” government workers on 30 days’ leave.

Hong Kong announced quarantine measures for suspected cases, although one woman arriving from Africa with possible symptoms tested negative, while the EU said it was ready to deal with the threat.

The International Civil Aviation Organisation (ICAO) has held talks with global health officials on potential measures to halt the spread of the disease.

Based On The Hindu

GA Team

Mahendra Educational PVT LTD

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‘India can achieve manufacturing growth of 12-14%’

India has the capability to achieve 12-14 per cent average manufacturing growth over the next 10 years backed by the talent it has to drive innovation and critical decision it can take at the micro and enterprise level, said Ajay Shankar, Member Secretary, National Manufacturing Competitiveness Council, here on Thursday.

Mr. Shankar was speaking at the Visionary Leadership for Manufacturing Programme (VLMF), an initiative organised by the Confederation of Indian Industry (CII) to transform the manufacturing industry.

“In the past few years, public discourse in the country has shifted towards manufacturing and with the talent generated from VLFM that is expected to be further scaled up, Indian manufacturing will hopefully be the supply base,” Mr. Shankar said.

Speaking about the special initiative called Village Buddha model, Mr. Shankar said: “Unless we transform the way where economic activities are undertaken, we cannot transform the quality of life.”

The investment sentiment has revived in the past few months and the private sector, including global players, is expected to help invest in the manufacturing sector. The country witnessed 15 per cent growth in the manufacturing sector in 2006-07. “Therefore, achieving 14 per cent growth is not impossible,” he added.

Based on The Hindu

GA Team

Mahendra Educational Pvt Ltd

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