(Current Affairs) Economy & Energy | January : 2014

Economy

Norms relaxed for participation of NBFCs in Insurance JVs

Reserve Bank of India (RBI) on 28 November 2013 relaxed norms for participation of Non-Banking Finance Companies (NBFCs) in the insurance joint ventures by allowing them to hold more than 50 percent in such companies. The notification of Reserve Bank of India has stated that - it has been decided that in cases where IRDA issues calls for capital infusion into the Insurance joint venture company, the RBI may, on a case to case basis, consider need based relaxation of the 50 percent group limit. The relaxation will be subject to compliance by the NBFC with all regulatory conditions. In the operation of Insurance Company, the IRDA often requires an insurance company to expand its capital taking into account the stipulations of the Insurance Act and the solvency requirements of the insurance company. The restriction of a group limit of the NBFC to 50 percent of the equity of the insurance joint venture company prescribed in the above mentioned circular may act as a constraint for the insurance company in meeting the requirement of IRDA.

RMS for Trade Facilitation in Export Sector Introduced

Union Finance Minister P. Chidambaram was on 13 November 2013 inaugurated the IT based Risk Management System (RMS) for the Customs clearance of export goods at New Delhi. Government has introduced RMS to enhance trade facilitation in export sector and to check smuggling of drugs, weapons and other illegal substances harmful to the country. RMS will also enable the Excise and Customs Department to enhance the level of facilitation and speed up the process of cargo clearance. The single window system of RMS will contribute to reduce in dwell time, by achieving the desired objective of reducing the transaction cost in order to make the business internationally competitive. The launch of RMS in exports covers 11 Customs stations at Bangalore, Chennai, Delhi, Hyderabad, Mumbai, Pune and Tutocorin. It would be extended to all EDI Customs stations by year end. Benefits are expected to accrue to the trade in terms of faster clearances and reduced transaction costs thereby enhancing the global competitiveness of our export goods.

Medium Manufacturing Enterprises to be included under Priority Sector

The Reserve Bank of India (RBI) on 26 November 2013 allowed banks to treat loans given to medium manufacturing enterprises after 13 November 2013 as priority sector advance. RBI stated that the step has been taken to provide enhanced liquidity support to the medium and small enterprises. The RBI also allowed incremental bank loans to medium services enterprises extended after 13 November 2013 to up to 100 million rupees and raised the loan limit given to micro and small service enterprises to 100 million rupees from 50 million rupees that will be treated as priority sector advance. This facility will remain open till 31 March 2014. Under priority sector advance, most banks have to lend 40 percent of their loans to agriculture, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sectors.

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