August 2019

Daily Current Affairs (31-08-19)

GOVT ANNOUNCES MEGA MERGER OF PUBLIC SECTOR BANKS

Related Topics: Banking Sector Reforms, Narasimham Committee Report

Why in News

  • As a part of government’s efforts to revive the economy, Finance Minister announced a slew of banking reform measures, including merger of 10 public sector banks into four entities.
  • After merger of banks, the country will have 12 public sector banks instead of 27 in 2017.

Banks to be merged

A. Punjab National Bank with Oriental Bank of Commerce and United Bank

  • The amalgamated entity — to be called Punjab National Bank — will become the second-largest public sector bank in India, after the State Bank of India.
  • It will also become the second-largest bank in India in terms of its branch network, with a combined total of 11,437 branches.

B. Canara Bank and Syndicate Bank

  • It would render the merged entity the fourth-largest public sector
  • The merger has the potential to lead to large cost reductions due to network overlaps.
  • Similar business cultures of the two banks would also facilitate a smooth transition.

C. Union Bank of India with Andhra Bank and Corporation Bank

  • It would make the merged entity the fifth largest public sector bank.
  • This merger would have the potential to increase the post-merger bank’s business by 2-4.5 times.

D. Indian Bank and Allahabad Bank

  • The merger would lead to a doubling of the size of the business.
  • It would also lead to a huge potential for scaling up due to the complementary networks of the two banks.

Global, National and Regional Focus

  • Following the mergers, the country will have a total of 12 public sector banks.
  • Punjab National Bank, Canara Bank, Union Bank of India, Indian Bank, State Bank of India, and Bank of Baroda will be able to compete at a global level.
  • Bank of India and Central Bank of India will be able to expand their national presences.
  • Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank will be able to strengthen their regional focus.

Why Merging Banks?

  • It will lead to the creation of big banks with an enhanced capacity to give credit.
  • These big banks would also be able to compete globally and increase their operational efficiency by reducing their cost of lending.
  • Bigger banks would also be able to adhere to BASEL III
  • Amalgamation is the “best route” to scale up banking sector operations and to support the target of achieving a $5 trillion economic size for India in five years.

Background

  • 5 associate banks of SBI (State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore, State Bank of Mysore and State Bank of Patiala) and Bharatiya Mahila Bank were merged with SBI in April, 2017.
  • Last year, the government had approved the merger of Vijaya Bank and Dena Bank with Bank of Baroda (BoB) that became effective from April 1, 2019.

[Sources: PIB, The Hindu, Indian Express]

 

NATIONAL LABORATORY DIRECTORY

Related Topics: Science & Technology, Bureau of Indian Standards (BIS)

News

The Union Minister of Consumer Affairs has launched the National Laboratory Directory (NLD).

About NLD

  • It is an online directory, which provides information about Indian standards of various products and testing infrastructure in the country for the benefit of various stakeholders such as start-ups.
  • It provides in detail what products can be tested against which standards — Indian or international.
  • It is a one-stop-shop for all testing needs of the industries, academia, researchers and other stakeholders who need to get their Testing Facilities accredited / certified / recognised.
  • The platform was created by the Bureau of Indian Standards (BIS).

Coverage

  • There are estimated 10,000 labs across the country.
  • Currently, about 4,500 labs owned by public and private academic institutions are listed on the online directory.

[Source: The Hindu]

 

GDP GROWTH DOWN TO 6-YEAR LOW

Related Topics: Indian Economy, GDP

News

  • India’s economy grew by merely 5 per cent in the April-June quarter, down from 5.8 per cent in the previous quarter, according to GDP data released by National Statistical Office (NSO).
  • The previous low in GDP growth was recorded at 4.3 per cent in the January-March quarter of 2012-13.

Quarterly GDP Estimate

  • The data show that the manufacturing sector grew at an anaemic two-year low of 6% in the first quarter of 2019-20, down from 12.1% in the same quarter of the previous year.
  • The agriculture sector also saw a dramatic slowdown in growth to 2% from 5.1% over the same period.
  • The plight of the real estate sector was also highlighted by the slowdown in its growth rate to 7% in the first quarter of this financial year, compared with 9.6% in the same quarter of 2018-19.

  • The growth slowdown was led by private final consumption expenditure, which grew 3.1% only.
  • Investment demand also remained lacklustre and fixed capital formation grew 4%.
  • Only government expenditure provided support to growth and increased 8.8%.
  • Electricity and power generation grew by 8.6%, compared with7% in the same quarter of the previous year.

Reasons for Slowdown

  • Slowdown in India’s GDP growth is due to both endogenous and exogenous
  • The impact from global headwinds due to the deceleration in developed economies and the Sino-American trade conflict are some of the exogenous causes.
  • India’s problem lies in the sharp decline in consumption demand even as investment demand continued to remain weak.
  • The collapse of private consumption demand from 10.6% in the fourth quarter of financial year 2017-18 to 3.1% in the first quarter of financial year 2019-20 is a real cause of concern.
  • Manufacturing growth is the chief reason for the low level of performance and the high level of layoffs and the problem here seems to be more on the demand side.

Government Interventions

  • The government has recently announced a whole host of measures to help revive the economy, aimed at easing tax rules for foreign portfolio investors, start-ups, increasing credit outflows by the banks and NBFCs, increasing demand for the auto sector, and liberalising the foreign direct investment rules for single-brand retail.
  • Finance Minister also announced a slew of banking reform measures, including merging 10 banks into four entities.

Way Forward

  • As the Economic Survey 2019 suggests, investment is a critical driver of the economy with consumption being a key force multiplier.
  • Together with steps taken by the government for the banks and the financial sector, and structural reforms, investment should continue improving and drive economy to higher growth.
  • India requires significant investment in infrastructure, manufacturing and agriculture for the rapid growth rates of the last fifteen to twenty years to be sustained.
  • In order to fulfil this it needs to create a robust financial structure that can serve the needs and demands of growing nation.
[Sources: The Hindu, Economic Times]

 

DINDIGUL LOCK AND KANDANGI SAREE

Related Topics: Art & Culture, GI tag

News

Two well-known products from Tamil Nadu, Dindigul lock and Kandangi saree, have been given the Geographical Indication (GI) tag by The Geographical Indications Registry in Chennai.

Dindigul Lock

  • They are known throughout the world for their superior quality and durability and even the city is called Lock City.
  • Government institutions such as prisons, godowns, hospitals, and even temples use these locks instead of other machine-made ones.
  • The abundance of iron in this region is the reason for the growth of the industry.
  • There are over 50 varieties of locks made by the artisans using raw materials such as MS flat plates and brass plates procured from the nearby towns, including Madurai and Salem.
  • Dindigul Lock, Hardware and Steel Furniture Workers Industrial Co-operative Society Limited filed the application for the Dindigul lock.

Kandangi Saree

  • The Kandangi sarees are manufactured in the entire Karaikudi taluk in Sivaganga district.
  • They are characterised by large contrast borders and some are known to have borders covering as far as two-thirds of the saree which is usually around 5.10 m-5.60 m in length.
  • Worn in summer, these cotton sarees are usually bought by customers in bulk.
  • The Amarar Rajeev Gandhi Handloom Weavers Co-operative Production and Sales Society Limited filed the application for the Kandangi saree.

[Source: The Hindu]

 

FACTS OF THE DAY

JANOVA

Kudumbashree is developing an egg collection and value chain system for marketing the eggs produced by its members. The project, named Janova, aims at a steady market and consistent price for brown eggs produced in Kerala. Kudumbashree is one of the largest women-empowering projects in India and is a model for implementing various poverty implementing programmes at the local self government level in Kerala.

BANK RECAPITALISATION

Finance Minister has laid out the broad strokes for the recapitalisation plan for public sector banks, providing the approximate allocation breakup for about ₹55,000 crore of the ₹70,000 crore promised in the Budget. Punjab National Bank, which will now be merged with Oriental Bank of Commerce and United Bank, will receive the highest share of the capital infusion of about ₹16,000 crore. Union Bank of India, which is to be merged with Andhra Bank and Corporation Bank, will receive about ₹11,700 crore. The government also announced the tentative recapitalisation breakup for the remaining smaller banks.

Skull ‘MRD’

A “remarkably complete” 3.8-million-year-old skull of an early human has been unearthed in Ethiopia, a discovery that has the potential to alter our understanding of human evolution. The skull, known as MRD, was discovered not far from the younger Lucy — the ancient ancestor of modern humans — and shows that the two species may have co-existed for about 100,000 years.

STARTUP CELL

Central Board of Direct Taxes (CBDT) notified the creation of a five-member special cell named ‘Startup Cell’ to address the grievances of startups with relation to angel tax and other tax-related issues. It will be headed by the member (Income Tax and Computerisation) of the board. The cell will work towards redressal of grievances and mitigate tax-related issues in case of startup entities with respect to administration of Income-tax Act, 1961.

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