Newspaper Must Read Articles of The Day – 09 August 2015

Newspaper analysis from The Hindu bearing
relevance to Civil Services preparation

Economy/Business

• P-Notes require more stringent monitoring: Although Participatory notes are highly regulated products and their beneficiaries are known on a monthly basis to SEBI and daily basis to FPI, there is no daily monitoring of the end-user by the regulator, which is a must. Because the Know-Your-Investor or Know-Your-Client (KYC) norms are applicable for all foreign funds coming in to India, FIIs had switched to using P-Notes, that allow the beneficiary (end-user) to remain anonymous. The issue is trending because black money generated is being pumped back into the country via this method.

• Capital infusion not a game changer, says Moody’s: The government’s plan to recapitalise public sector undertaking (PSU) banks to the tune of Rs.70,000 crore over four years is ‘credit positive, but not a game changer’ because the capital amount is only a fraction of the overall capital requirements over the next four years.

• Changes in rates can shift bank savings to mutual funds: To boost investment in the country, a drop in bank rates is almost inevitable by the RBI in the near future. But this could have an unintended impact because instead of taking money out of banks and putting it in investments, people could simply put in into mutual funds (that provide a greater interest rate than banks).