Daily Quiz: UPSC Prelims Marathon (Economy) – July 28, 2020

National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in India, is an initiative of Reserve Bank of India (RBI) and Indian Banks’ Association (IBA) under the provisions of the Payment and Settlement Systems Act, 2007, for creating a robust Payment & Settlement Infrastructure in India.

• Considering the utility nature of the objects of NPCI, it has been incorporated as a “Not for Profit” Company under the provisions of Section 25 of Companies Act 1956 (now Section 8 of Companies Act 2013), with an intention to provide infrastructure to the entire Banking system in India for physical as well as electronic payment and settlement systems.
• The Company is focused on bringing innovations in the retail payment systems through the use of technology for achieving greater efficiency in operations and widening the reach of payment systems.
• The ten core promoter banks are State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, and Union Bank of India, Bank of India, ICICI Bank, HDFC Bank, Citibank N. A. and HSBC.
• In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.

National Productivity Council of India (NPC), established in the year 1958, is an autonomous organization under Department for Promotion of Industry & Internal Trade, Ministry of Commerce and Industry, Government of India (Chairman of NPC).

• Besides undertaking research in the area of productivity, NPC has been providing consultancy and training services in areas of Industrial Engineering, Agri-Business, Economic Services, Quality Management, Human Resources Management, Information Technology, Technology Management, Energy Management, Environmental Management etc., to the Government and Public & Private sector organizations.
• NPC is a constituent of the Tokyo-based Asian Productivity Organization (APO), an Inter-Governmental Body of which the Government of India is a founding member.

Maidavolu Narasimham, the 13th governor of the Reserve Bank of India (RBI), in 1991 recommended merger of public sector banks to make them stronger.

• It had envisaged a three-tier banking structure with three large banks with international presence at the top, eight to 10 national banks at tier two, and a large number of regional and local banks at the bottom.
• Bank consolidation procedures are laid out in the Banking Regulation Act, 1949.
• Any two public sector banking entities can initiate merger talks, but the scheme of the merger must be finalized by the government in consultation with the central bank and it must be placed in Parliament.
• Parliament reserves the right to modify or reject the scheme.  In case of a merger between a public sector bank and a private bank too, parliamentary approval is a must.

RBI has placed the financially troubled Yes Bank under a moratorium (temporary suspension).

• After placing this bank under a moratorium, the RBI announced a draft Scheme of Reconstruction.
• This scheme entails the State Bank of India (SBI) investing capital to acquire a 49% stake in the restructured private lender.

In the stock markets, the circuit breaker halts trading in all equity and equity derivative markets nationwide for a specified time, when the index hits predefined levels.

• Circuit breakers are applicable for individual securities as well.
• The market regulator, Securities and Exchange Board of India (SEBI) has introduced circuit breakers to curb severe market selling/volatility in the stock markets, with effect from July 2, 2001.
• The market-wide circuit breakers would be triggered by the movement of either BSE Sensex or NSE S&P CNX Nifty, whichever is breached earlier.
• Circuit breakers are triggered when either of the indices moves either ways (upside/downside) by 10 per cent or 15 per cent and 20 per cent, compared to the previous day’s closing level of the index.

On February 10 – 2020, the U.S. removed more than a dozen countries, including India, from its list of countries that are classified as “developing” for trade purposes.

• These countries will now be classified instead as “developed” economies, thus stripping them of various trade benefits.
• The office of the United States Trade Representative (USTR) maintains a list of countries that it classifies as “developing”, “developed”, and “least-developed”.
• Countries that are classified as “developing” are allowed to export certain goods to the U.S. without being hit by punitive tariffs that are usually imposed on goods from “developed” countries.
• The “developing country” status owes its origin to the U.S. Trade Act of 1974, which authorised the Generalized System of Preferences (GSP) to help poor countries develop faster.
• These benefits were extended further under the World Trade Organization wherein rich countries agreed to grant trade benefits to countries that classified themselves as poor.
• It is worth noting that about two-thirds of countries that are members of the WTO classify themselves as “developing” countries and avail benefits.

The World Economic Forum on Friday announced the first global consortium focused on designing a framework for the governance of digital currencies, including stablecoins.

• The Global Consortium for Digital Currency Governance will aim to increase access to the financial system through innovative policy solutions that are inclusive and interoperable.
• This is the first initiative to bring together leading companies, financial institutions, government representatives, technical experts, academics, international organizations, NGOs and members of the Forum’s communities on a global level.
• This consortium will focus on solutions for a fragmented regulatory system. Efficiency, speed, interoperability, inclusivity and transparency will be at the heart of this initiative.
• It will call for innovative regulatory approaches to achieve these goals and build trust.
• A set of guiding principles will be co-designed to support public and private actors exploring the opportunities that digital currencies present.

The Export Credit Guarantee Corporation of India (ECGC) is optimistic that the Nirvik scheme announced by the Union Government would give a fillip to export lending and insurance cover for export credit.

• Under the Nirvik scheme, ECGC will provide 90% cover.
• The additional outgo, if any, due to the enhanced cover would be supported by the government and the scheme would be valid for five years.
• Currently, the average cover given to banks by the ECGC is 60%.

The ministries of Power, Coal and Railways have formed a web portal to track the movement of coal from the coal mines to power plants.

• The portal is named PRAKASH — an abbreviation for Power Rail Koyla Availability through Supply Harmony.
• Speaking at the launch event, Minister for Coal, Mines and Parliamentary Affairs, said: “This portal will help avoid any blame game between ministries on the supply and availability of coal. It will also help coal better plan better coal supplies.”
• “Coal supplies this year were disrupted because of unprecedented rains and strikes. Coal India has been increasing its supplies considerably and we expect to meet all demands of power plants”.
• This portal is designed to help in mapping and monitoring entire the coal supply chain for power plants, through coal stock at the supply end (mines), coal quantities/rakes planned, coal quantity in transit and coal availability at power generating station.
• It aims at bringing better coordination for coal supplies among all stakeholders, namely the Ministry of Power, Ministry of Coal, Coal India, Railways and power utilities.

An RBI concept paper (March 2016) on expanding the card acceptance infrastructure in the country had suggested that besides card issuers (banks) and card payment networks (such as Visa, MasterCard and RuPay), the government and the RBI to consider contributing to the Acceptance Development Fund (ADF).

• ADF is to develop debit and credit card acceptance infrastructure in the country.
• While the government’s contribution to the ADF could be routed through the Financial Inclusion Fund (FIF), which is operated by the National Bank for Agriculture and Rural Development (Nabard), the RBI’s contribution could come from the Depositors’ Education and Awareness (DEA) Fund.