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The InIorcement irectorute, while dobbing obui "u centre Ior huwulu
trunsuctions und money luondering uctivities, on Thorsduy suid thut the resolt oI
its ongoing investigutions into the cuse uguinst high-proIile Pone-bused boilder
und contructor Avinush Bhosule coold huve "other rumiIicutions oI u serioos
nutore. Bhosule wus urrested in Muy lust yeur Irom the Mombui Internutionul
Airport on his urrivul Irom London in un Imirutes Ilight with u stopover ut obui.
He wus churged with smoggling ondeclured cush und costly goods into the coontry.
In its speciul leuve petition {SLP) chullenging the Aogost o order oI the Bombuy
High Coort usking the I to complete its investigution uguinst Bhosule within one
week und prodoce his pussport in coort on the next dute, the ugency hus ulso
provided detuils oI bunks uccoonts und credit curds held by Bhosule in obui. The
ugency discovered these only in Joly this yeur uIter he reveuled the existence oI
bunks uccoonts in obui's bunks in the nume oI Swumit Overseus IZI. In its SLP,
the I hus ulso qoestioned the very existence oI one Asghur Ali, u obui 'resident'
with whom Bhosule cluims he hud monetury trunsuctions, suying it wus in the
process oI veriIying the untecedents oI Ali, which, it udded, ure not Iree Irom
Iemu soonds deuthknell Ior huwulu operutors
TNN Aog 1,, oo1, o1.oum IST
hyderubud: with legul trunsIer oI money Irom Ioreign coontries becoming u
reulity, huwulu operutors in the city huve virtoully gone oot oI bosiness.
the introdoction oI legul money trunsIer und other reluxutions by the centrul
government hus resolted in u shurp decline in the nomber oI huwulu trunsuctions
in the city to the extent thut ulmost ull `gungs' involved in the bosiness huve
switched over to other locrutive uctivities.
decline in the huwulu bosiness cume soon uIter the Ioreign exchunge regolution uct
{Ieru) wus chunged to Ioreign exchunge muintenunce uct in ooo {Iemu). uccording
to u huwulu operutor, there osed to be trunsuctions runging Irom rs S crore to rs 1o
crore throogh the huwulu network, bot now the trunsuctions do not exceed rs one
this Iuct is udmitted even by the enIorcement directorute, which ucts us the
wutchdog to prevent huwulu trunsuctions. uccording to u senior ed oIIiciul, there is
u steep decline in huwulu trunsuctions in the city. he uttriboted this heulthy
development to the legul trunsIer oI money. "the huwulu operutions ure no more
locrutive doe to redoction in murgin money. till 1qq,, the muin operutors osed to
get ut leust o per cent on euch trunsuction. bot now the proIit murgin hus shronk
to jost Ioor per cent," he suid.
uccording to conservutive estimutes, there ure uboot o,ooo hyderubudis working
in the golI und other coontries. they osed to chunnel their eurnings und send
money home throogh the golI-bused huwulu operutors. bot now most oI them ure
sending money home throogh legul meuns.
doring the lust six months, only two cuses oI huwulu trunsuctions cume to the
notice oI the enIorcement directorute. in both cuses, the trunsuctions were
negligible when compured to eurlier ones.
uccording to soorces, in one cuse the uccosed did u trunsuction oI neurly rs Sg lukh
over u period oI one yeur, while in the second cuse the trunsuction wus jost to the
tone oI rs Iive lukh.
Hawa!a TransactInns

Chaptcr V

An Impnrtant nbjcctIvc nf cxchangc rcgu!atInn Is tn prcvcnt hawa!a transactInns.

Wc may brIcf!y cnnsIdcr 'hawa!a' frnm twn ang!cs.

(I) !cga!, and

(II) EcnnnmIc.

Lcga! rcstrIctInns nn hawa!a.

5.1 Undcr FERA, scctInns 8 & 9 prnvIdcd dctaI!cd !cga! prnhIbItInns nn hawa!a markct.
5cctInn 8 prnvIdcd thc rcstrIctInns nn transactInns In fnrcIgn currcncy as wc!! as cnnvcrsInns
bctwccn IndIan currcncy & fnrcIgn currcncy, 5cctInn 9 cnvcrcd rupcc transactInns. 5cctInn
9(1)(f) prnvIdcd spccIfIc prnhIbItInn nn hawa!a. Rcst nf thc c!auscs In scctInn 9 wcrc dIrcct /
IndIrcct suppnrt tn thc maIn targct nf prcvcntIng f!Ight nf capIta! nutwards thrnugh any

5.2 FEMA bI!! 1998 had madc a prcIs nf a!! prnvIsInns nf FERA. In thc prnccss, scctInn
9(1)(f) was drnppcd.

5.3 FEMA 1999 has rcIntrnduccd thc cnnccpt thrnugh scctInn 3. 5cctInn 3 (a) nf FEMA
cnvcrs 5.8 nf FERA. 5cctInn 3(b) tn 3(d) nf FEMA cnvcr 5.9 nf FERA.

5.4 5cctInns 9(1)(f)(FERA) and 3(d)(FEMA) arc dIffIcu!t tn Intcrprct and undcrstand.
Fn!!nwIng cxamp!c wI!! cxp!aIn nnc nf thc scvcra! fnrms nf hawa!a transactInns and makc It
casIcr tn undcrstand 5.9(I)(f).

5.4.1 I!!ustratInn

NRI cmp!nycd In Lnndnn.


npcratIng In

Fathcr nf Mr. L 5tayIng In IndIa.

cnuntcr part
In IndIa.

5.4.2 Exp!anatInns

Assumc that Mr. F Is an IndIan rcsIdcnt, sctt!cd In IndIa. HIs snn Mr. L has gnnc tn Lnndnn
fnr cmp!nymcnt. Hc has bccnmc a nnn-rcsIdcnt nf IndIa (NRI). Mr. L wants tn scnd a rcgu!ar
mnnth!y rcmIttancc tn hIs fathcr In IndIa. If hc scnds pnunds 100 thrnugh thc bankIng
channc!, hIs fathcr wI!! gct Rs. 7,000 In IndIa. If hc scnds pnunds 100 thrnugh thc hawa!a
channc!, hIs fathcr wI!! gct Rs. 7,700. Hawa!a prcmIum Is assumcd 10%.

What transactInns actua!!y takc p!acc !

Hawa!a dca!crs dn nnt scnd mnncy tn IndIa In gunny bags.

Mr. L. wI!! pay pnunds 100 tn Mr. HDL In Lnndnn. As a cnmpcnsatnry paymcnt, nn thc
InstructInns nf Mr. HDL, Mr. HC In IndIa wI!! pay Rs. 7,700 tn Mr. F.

Thc c!carIng bctwccn HDL & HC Is cnmpcnsatcd by transactInns wIth thc smugg!crs.

Thcsc facts rcduccd tn !cga! !anguagc wnu!d mcan -

(I) HC, an IndIan rcsIdcnt, makcs a paymcnt nf IndIan rupcc, wIthIn IndIa, tn Mr. F, an
IndIan rcsIdcnt.

(II) In cnmpcnsatInn nf ,

(III) Paymcnt In U.K., by Mr. L a BrItIsh rcsIdcnt, nf BrItIsh pnunds tn Mr. HDL annthcr
BrItIsh rcsIdcnt.

TransactInns undcr c!auscs (I) and (III) abnvc arc Indcpcndcnt!y, pcrfcct!y !cga! transactInns.
Nn nnc can prnhIbIt thcm.

Thc fact that thcy arc cnmpcnsatnry paymcnts makcs thcm I!!cga!.

ThIs Is thc csscncc nf 5.9 (I)(f) nf FERA.

5amc purpnsc Is achIcvcd by 5.3 (d) undcr FEMA - but by a dIffcrcnt !anguagc.

5.5 Hawa!a Markct - EcnnnmIc aspccts

Nntc :

In thIs chaptcr, wc arc dca!Ing wIth snmc fundamcnta! Issucs In FX ccnnnmIcs. Thcsc arc
tnuchcd upnn vcry brIcf!y. 5nmc Issucs arc sImp!y !Istcd & thcn nnt dIscusscd at a!!.

Thc prcscnt cnmmcntary Is a brIcf and quIck cnmmcntary. In thc ncxt cnmmcntary wc wI!!
strIvc tn dca! wIth a!! thcsc Issucs c!abnratc!y.

5.5.1 EcnnnmIc Grnund Rca!Ity

DcspItc thc strIctcst !cga! prnvIsInns, hawa!as havc actua!!y bccn mnst rnutInc transactInns.
5cvcra! pcnp!c havc transfcrrcd capIta! In nr nutsIdc IndIa thrnugh hawa!a at thcIr swcct
wI!!. Fnr thcm, rupcc has a!ways bccn "fu!!y cnnvcrtIb!c".

ThIs aspcct nf FERA Is a c!assIca! cxamp!c nf thc thcnry that "whcrc strnng cnmmcrcIa!
Intcrcsts tcmpt, nn amnunt nf !cga! rcstrIctInns wI!! bc succcssfu!".

5Incc rupcc kccps cnntInunus!y dcprccIatIng, wca!thy pcnp!c scckIng tn prntcct thc va!uc nf
thcIr wca!th havc a strnng ccnnnmIc Intcrcst In transfcrrIng thcIr wca!th nutsIdc IndIa.

5Incc thcrc Is a!mnst a!ways, In IndIa, a prcmIum nn fnrcIgn cxchangc, snmc NRIs may havc
a strnng Intcrcst In scndIng thcIr rcmIttanccs tn IndIa thrnugh thc hawa!a rnutc, rathcr than
thrnugh thc bankIng channc!.

5.5.2 Hnw can thIs hawa!a markct bc c!ImInatcd? Thcrc arc twn ways.

(I) Abn!ItInn nf Impnrt cnntrn!s, cspccIa!!y gn!d Impnrt, and

(II) 5tabI!Ity nf IndIan rupcc In FX markct.

5.5.3 Gn!d cnntrn! !cgIs!atInn was thc strnngcst bcncfactnr nf thc smugg!crs. Thcy had a
vcstcd Intcrcst In cnntInuatInn nf gn!d cnntrn! & ban nn Impnrt nf gn!d.

Gn!d smugg!Ing Intn IndIa, and hawa!a markct fnr NRI rcmIttanccs Intn IndIa wcrc
cnmp!cmcntary tn cach nthcr.

5.5.4 Gnvcrnmcnt nf IndIa cnnsIdcrab!y !Ibcra!Iscd Impnrt cnntrn!s & p!accd scvcra! Itcms
nn OGL (npcn Gcncra! !Iccncc tn Impnrt). Custnms dutIcs nn mnst Impnrt Itcms havc bccn
drastIca!!y rcduccd. Gn!d cnntrn! Act has bccn abn!Ishcd and gn!d Impnrt has bccn
!Ibcra!Iscd. A!! thcsc mattcrs havc dca!t a scvcrc b!nw tn smugg!Ing and hcncc a sccnnd b!nw
tn thc hawa!a markct. Thc hawa!a prcmIums havc cnmc dnwn.

As IndIa cnntInucs tn !Ibcra!Isc mnrc, smugg!Ing and hawa!a wI!! kccp rcducIng.

Thc ncxt ncccssary stcp Is tn rcmnvc a!! rcstrIctInns nn Impnrt nf gn!d, and nn paymcnt fnr
Impnrtcd gn!d.

5.5.5 5n far, It has bccn thc pn!Icy nf gnvcrnmcnt nf IndIa and RBI tn cnntInunus!y dcva!uc
thc rupcc.

IMF and U5A havc a!ways "advIscd" and snmctImcs "prcssurIscd" IndIa Intn dcva!uIng thc

In thc car!y nInctIcs, It was thc dcc!arcd pn!Icy nf RBI that If, In thc npcn markct, rupcc
dcprccIatcs, RBI wnu!d nnt Intcrvcnc. Hnwcvcr, If rupcc apprccIatcs, RBI wnu!d Intcrvcnc,
sc!! FX and stabI!Isc rupcc.

Expnrtcrs' !nbby has a!ways wantcd tn Incrcasc cxpnrts by undcrcuttIng prIccs by askIng fnr
chcapcr rupcc. Thcy havc a!ways prcssurIscd thc Gnvcrnmcnt Intn dcva!uIng / dcprccIatIng
thc rupcc.

ThIs has cnsurcd that wca!thy IndIans & NRIs havc cnntInucd vcstcd Intcrcst In thc hawa!a

5.5.6 DcprccIatInn nf IndIan rupcc mcans hIghcr prnfIts fnr thc cxpnrtcrs.

Hnwcvcr, nn nnc rca!Iscd that It mcans hugc !nsscs tn -

(I) IndIans at !argc,

(II) IndIan Gnvcrnmcnt, and

(III) FnrcIgn Invcstnrs.

CnnsIdcr thc fn!!nwIng:

IndIan rupcc ratcs Vs. U.5. dn!!ar wcrc as undcr.
Ycar 1981 Rs. 8 pcr dn!!ar.

Ycar 1991 Rs. 18 pcr dn!!ar.

Ycar 1999 Rs. 43 pcr dn!!ar.

(A!! fIgurcs arc rnundcd nff)
IndIa's tnta! FX dcbt was as undcr -
Ycar 1991 U.5. $ 100 bI!!Inns.

Ycar 1999 U.5. $ 100 bI!!Inns.

Fnr thc sakc nf 5Imp!IcIty In ca!cu!atInns, thc fIgurcs arc apprnxImatcd fnr bnth thc
ycars. Thc dIffcrcnccs arc mInnr.

ThIs FX dcbt cnnvcrtcd Intn IndIan rupcc wnu!d mcan that -
In thc ycar 1991 It was Rs. 1800 bI!!Inns.

In thc ycar 1999 It Is Rs. 4300 bI!!Inns.

A nct !nss tn Gnvcrnmcnt nf
IndIa & hcncc tn ALL nf us-
Rs. 2,500 bI!!Inns

ThIs Is a vcry substantIa! !nss Ignnrcd by cvcrynnc.

Cnmparc thIs !nss wIth thc fIsca! dcfIcIt fnr thc Gnvcrnmcnt nf IndIa fnr thc fInancIa! ycar
1998-99 - whIch was arnund Rs. 910 bI!!Inns. And thIs has bccn thc hIghcst dcfIcIt In IndIa's

5ummary : Dcva!uatInn / dcprccIatInn nf rupcc Is b!ccdIng IndIan ccnnnmy AND
cncnuragIng hawa!a markct.

5.5.7 Fnrtunatc!y fnr IndIa, It sccms that thc Gnvcrnmcnt & RBI havc rca!Iscd thIs fact
arnund ycar 1997. AttractIng fnrcIgn Invcstmcnts & prcvcntIng thc hacmnrrhagc nf IndIan
ccnnnmy Is mnrc Impnrtant than prnvIdIng chcapcr rupcc tn thc cxpnrt !nbby.

5.5.8 If wc cvcr rcach a pnsItInn that thc IndIan rupcc stnps dcprccIatIng & In fact
apprccIatcs by cvcn a nnmIna! 2% pcr ycar, thcn thc whn!c hawa!a markct wI!! bc wIpcd nut.

Hnwcvcr, thIs cannnt bc achIcvcd by GOI & RBI a!nnc. EntIrc IndIan busIncss cnmmunIty
has tn undcrstand thIs and makc stratcgIc & strnng cffnrts fnr achIcvIng a vcry dIffIcu!t &
hIgh!y rcwardIng targct.

FEMA and Mnncy LaundcrIng

Chaptcr VI

6.1 Arc thc FnrcIgn Exchangc Managcmcnt Act (FEMA) and PrcvcntInn nf Mnncy
LaundcrIng Act (PMLA) cnnncctcd ?!

Apparcnt!y, ccrtaIn !nbbIcs wcrc prcvcntIng FEMA rcp!acIng FERA un!css and untI! PMLA
was passcd. 5nmc pcrsnns bc!Icvcd that whI!c FX nffcnccs wnu!d attract !nwcr pcna!tIcs
undcr FEMA, thcy wnu!d bc cnvcrcd by PMLA.

ThIs bc!Icf dncs nnt sccm tn bc cnrrcct.

6.2 Thc purpnsc nf PMLA Is tn prcvcnt thc mafIa frnm InvcstIng thcIr wca!th Intn thc
ccnnnmy and acquIrIng cnntrn! nvcr thc ccnnnmy. CnnvcrtIng thcIr dIrty wca!th Intn nffIcIa!
wca!th Is ca!!cd "Mnncy LaundcrIng".

Thc dIrty mnncy Is ca!!cd "Prncccds nf CrImc" (POC).

AnythIng bccnmcs Prncccds nf CrImc If thc crImc a!!cgcd Is a crImc spccIfIcd In thc schcdu!c
tn thc PMLA. If an nffcncc Is a crImc undcr a partIcu!ar !aw whIch Is nnt !Istcd In thc
schcdu!c, thcn thc gaIns nf that nffcncc arc nnt POC. Thcy arc nnt dIrty mnncy as far as
PMLA Is cnnccrncd.

6.3 Fnr cxamp!c, Mr. A dncs nnt pay Incnmc-tax nn hIs Incnmc nf say Rs. 1,00,000. Thc
cntIrc amnunt Is b!ack mnncy. Hc has gaIncd Rs. 33,333 In Incnmc-tax. Hnwcvcr, an nffcncc
undcr Incnmc-tax Is nnt cnvcrcd In thc PMLA schcdu!c. Hcncc ncIthcr Rs. 33,333 nnr Rs.
1,00,000 Is cnvcrcd by PMLA. Any attcmpt In cnnvcrtIng thc b!ack mnncy Intn whItc Is NOT
mnncy !aundcrIng.

6.4 5ImI!ar!y, sa!cs tax, cxcIsc nr nctrnI cvasInn Is nnt cnvcrcd undcr PMLA.

6.5 5ImI!ar!y, nffcnccs undcr FEMA arc nnt !Istcd In thc PMLA schcdu!c. ThIs mcans that
an nffcncc undcr FEMA Is nnt cnvcrcd by thc PMLA.

ThIs was thc pnsItInn rIght frnm thc stagc nf IntrnductInn nf PMLA bI!!, 1998.

In nthcr wnrds frnm InccptInn, thc twn !aws arc Indcpcndcnt.

6.6 Thcrc Is a spccIfIc rcasnn fnr sc!cctIng nn!y thc mnst vIn!cnt / Impnrtant crImcs undcr
PMLA. Thc mafIa dca!Ing In murdcr, cxtnrtInn, tcrrnrIsm and prnstItutInn havc Immcnsc
!IquId wca!th. WIth thIs pnwcr nf wca!th, thcy gct bcst nf thc prnfcssInna! and physIca!
(arms and gnnndas) suppnrt. ThIs hc!p can prcvcnt actInn bcIng takcn agaInst thc mafIa.
Hcncc PMLA gIvcs massIvc pnwcrs nf arrcst and dccmIng prnvIsInns tn thc statutnry
authnrIty undcr PMLA.

Undcr nnrma! cIrcumstanccs, such massIvc pnwcrs havc tn bc rcstrIctcd, tn bc uscd nn!y
agaInst thc mnst dangcrnus crImIna!s. Thc pnwcrs arc dracnnIan. If thcy arc uscd agaInst
nrdInary crImIna!s, thcy !nnsc thcIr sIgnIfIcancc and sharpncss. Cnrrupt statutnry nffIccrs can
bc mnrc dangcrnus than crImIna!s - as far as thc cnmmnn man Is cnnccrncd.

Tn prcvcnt such a crIsIs, thc !Ist undcr PMLA schcdu!c has tn bc kcpt a carcfu!, shnrt !Ist.

New SEBI Guidelines for Mutual Funds
The Securities and Exchange Board of India (SEBI) has brought in
sweeping changes for the mutual fund industry. The impact of which will
be felt on the investor in more ways than one.

) First, for New Fund Offers (NFOs): They will only be
open for days. (ELSS funds though will continue to
stay open for up to 90 days) It will save investors from
a prolonged NFO period and being harangued by
advisors and advertisements. The motivation behind
the rule seems to be simple - if you can invest
anytime, why keep NFO period long?

2) NFOs can only be invested at the close of the NFO
period. Earlier, Mutual funds would keep an NFO open
for 30 days, and the minute they received their first cheque, the money
would be directly invested in the market; creating a skewed accounting for
those that entered later since they get a fixed NFO price.

The market regulator has corrected this by extending Application
Supported by Blocked Amount (ASBA) to mutual funds. This will become
effective starting July
this year.

By the ASBA process (Application Supported by Blocked Amount) one can
continue to earn interest in the bank account until the NFO closes
(remember there is usually no rejection or "oversubscription" in a mutual
fund NFO) which means that the cheque goes for clearing after the NFO
has closed irrespective of when it was sent. The fund manager will be able
to invest once the NFO closes.

3) Dividends can now only be paid out of actually realized gains. Impact: it will
reduce both the quantum of dividends announced, and the measures used
by MFs to garner investor money using dividend as a carrot to entice new

4) Equity Mutual funds have been asked to play a more active role in
corporate governance of the companies they invest in. This will help mutual
funds become more active and not just that, they must reveal, in their
annual reports from next year, what they did in each "vote". SEBI has now
made it mandatory for funds to disclose whether they voted for or against
moves (suggested by companies in which they have invested) such as
mergers, demergers, corporate governance issues, appointment and
removal of directors. MFs have to disclose it on their website as well as
annual reports.

) Equity Funds were allowed to charge more as management fees if
the funds were "no-load"; but since SEBI has banned entry loads, this extra
has also been removed.

6) SEBI has also asked Mutual Funds to reveal all commission paid to it's
sponsor or associate companies, employees and their relatives.

) Regarding the Fund-of-Fund (FOF) - The market regulator has stated that
information documents that Asset Management Companies (AMCs) have
been entering into revenue sharing arrangements with offshore funds in
respect of investments made on behalf of Fund of Fund schemes create
conflict of interest. Henceforth, AMCs shall not enter into any revenue
sharing arrangement with the underlying funds in any manner and shall
not receive any revenue by whatever means/head from the underlying

These guidelines set by the SEBI will lead to greater transparency for the
common investor. SEBI formulates policies and regulates the mutual funds
to protect the interest of the investors. With these guidelines falling in
place it would create better trust and transparency and an investable
environment that would attract investors with greater faith and
confidence. A welcome & refreshing move!

To protect the interest of the investors, SEBI formuIates poIicies and reguIates the
mutuaI funds. It notified reguIations in 1993 (fuIIy revised in 1996) and issues guideIines
from time to time. MF either promoted by pubIic or by private sector entities incIuding
one promoted by foreign entities are governed by these ReguIations.

SEBI approved Asset Management Company (AMC) manages the funds by making
investments in various types of securities. Custodian, registered with SEBI, hoIds the
securities of various schemes of the fund in its custody. The generaI power of
superintendence and direction over AMC is vested with the trustees.

According to SEBI ReguIations, two thirds of the directors of trustee company or board
of trustees must be independent . They shouId not be associated with the sponsors. 50%
of the directors of AMC must be independent. AII mutuaI funds are required to be
registered with SEBI before they Iaunch any scheme.

Increase of Ioad more than the IeveI mentioned in the offer document is appIicabIe onIy
to prospective investments by the MFs. For originaI investments, the offer documents
has to be amended to make investors aware of Ioads at the time of investments.

Can a mutuaI fund change the asset aIIocation whiIe depIoying funds of investors?
Considering the market trends, any prudent fund managers can change the asset
aIIocation i.e. he can invest higher or Iower percentage of the fund in equity or debt
instruments compared to what is discIosed in the offer document. It can be done on a
short term basis on defensive considerations i.e. to protect the NAV. Hence the fund
managers are aIIowed certain fIexibiIity in aItering the asset aIIocation considering the
interest of the investors. In case the mutuaI fund wants to change the asset aIIocation on
a permanent basis, they are required to inform the unithoIders and giving them option to
exit the scheme at prevaiIing NAV without any Ioad.

How Iong wiII it take for transfer of units after purchase from stock markets in case of
cIose-ended schemes?
According to SEBI ReguIations, transfer of units is required to be done within thirty days
from the date of Iodgment of certificates with the mutuaI fund.

Can a mutuaI fund change the nature of the scheme from the one specified in the offer
Yes. However, no change in the nature or terms of the scheme, known as fundamentaI
attributes of the scheme e.g.structure, investment pattern, etc. can be carried out unIess
a written communication is sent to each unithoIder and an advertisement is given in one
EngIish daiIy having nationwide circuIation and in a newspaper pubIished in the
Ianguage of the region where the head office of the mutuaI fund is situated. The
unithoIders have the right to exit the scheme at the prevaiIing NAV without any exit Ioad
if they do not want to continue with the scheme. The mutuaI funds are aIso required to
foIIow simiIar procedure whiIe converting the scheme form cIose-ended to open-ended
scheme and in case of change in sponsor.

If mutuaI fund scheme is wound up, what happens to money invested?
In case of winding up of a scheme, the mutuaI funds pay a sum based on prevaiIing NAV
after adjustment of expenses. UnithoIders are entitIed to receive a report on winding up
from the mutuaI funds which gives aII necessary detaiIs.

How can the investors redress their compIaints?
Investors wouId find the name of contact person in the offer document of the mutuaI
fund scheme whom they may approach in case of any query, compIaints or grievances.
Trustees of a mutuaI fund monitor the activities of the mutuaI fund. The names of the
directors of asset management company and trustees are aIso given in the offer
documents. Investors can aIso approach SEBI for redressaI of their compIaints. On
receipt of compIaints, SEBI takes up the matter with the concerned mutuaI fund and
foIIows up with them tiII the matter is resoIved

What is the procedure for registering a mutuaI fund with SEBI ?
An appIicant proposing to sponsor a mutuaI fund in India must appIy in Form A with a
fee of Rs.25,000. The appIication is examined and once the sponsor satisfies certain
conditions such as being in the financiaI services business and possessing positive net
worth for the Iast five years, having net profit in three out of the Iast five years and
possessing the generaI reputation of fairness and integrity in aII business transactions, it
is required to compIete the remaining formaIities for setting up a mutuaI fund. These
incIude inter aIia, executing the trust deed and investment management agreement,
setting up a trustee company/board of trustees comprising two- thirds independent
trustees, incorporating the asset management company (AMC), contributing to at Ieast
40% of the net worth of the AMC and appointing a custodian. Upon satisfying these
conditions, the registration certificate is issued subject to the payment of registration
fees of Rs.25.00 Iacs For detaiIs, see the SEBI (MutuaI Funds) ReguIations, 1996.

What is the procedure for redressaI of investor grievances?
When investors send compIaints to SEBI, SEBI takes up the matter with the concerned
mutuaI funds and foIIows up with them tiII they are resoIved.
Sarva Shiksha Abhiyan (EngIish: The Education for AII Movement), is an Indian
Government programme aimed at the universaIization of eIementary education "in a time
bound manner", as mandated by the 86th amendment to theConstitution of India making
free and compuIsory education to chiIdren of ages 6-14 (estimated to be 205 miIIion in
number in 2001) a fundamentaI right. The programme was pioneered by AtaI Bihari
Its goaIs of 2011 were to:
Open new schooIs in areas which do have them and to expand existing schooI
infrastructures and maintenance.
Address inadequate teacher numbers, and provide training a deveIopment for existing
Provide quaIity eIementary education incIuding Iife skiIIs with a speciaI focus on the
education of girIs and chiIdren with speciaI needs as weII as computer education.

It was formed officiaIIy by the Government of India in 1992 with SEBI Act 1992
passed by the Indian ParIiament. SEBI is headquartered in the business district
of Bandra-KurIa compIex inMumbai, and has Northern, Eastern, Southern and Western
regionaI offices in New DeIhi, KoIkata, Chennai and Ahmedabad.
ControIIer of CapitaI Issues was the reguIatory authority before SEBI came into
it derived authority from the CapitaI Issues (ControI) Act, 1947.
InitiaIIy SEBI was a non statutory body without any statutory power. However in 1995, the
SEBI was given additionaI statutory power by the Government of India through an
amendment to the securities and Exchange Board of India Act 1992. In ApriI, 1998 the
SEBI was constituted as the reguIator of capitaI market in India under a resoIution of the
Government of India.
[edit]Organization structure
Upendra Kumar Sinha was appointed chairman on 18 February 2011 repIacing C. B. Bhave.

The Board comprises

Name Designation
Upendra Kumar Sinha Chairman
Prashant Saran WhoIe Time Member
CA. T. V. Mohandas Pai Director, Infosys
Dr. Thomas Mathew Joint Secretary, Ministry of Finance
V. K. Jairath Member Appointed
Anand Sinha Deputy Governor, Reserve Bank of India
List of former Chairmen
Name From To
C. B. Bhave 18 February 2008 18 February 2011
M. Damodaran 18 February 2005 18 February 2008
G. N. Bajpai 20 February 2002 18 February 2005
D. R. Mehta 21 February 1995 20 February 2002
S. S. Nadkarni 17 January 1994 31 January 1995
G. V. Ramakrishna 24 August 1990 17 January 1994
Dr. S. A. Dave 12 ApriI 1988 23 August 1990
[edit]Functions and responsibiIities
SEBI has to be responsive to the needs of three groups, which constitute the market:
the issuers of securities
the investors
the market intermediaries.
SEBI has three functions roIIed into one body: quasi-IegisIative, quasi-judiciaI and quasi-
executive. It drafts reguIations in its IegisIative capacity, it conducts investigation and
enforcement action in its executive function and it passes ruIings and orders in its
judiciaI capacity. Though this makes it very powerfuI, there is an appeaIs process to
create accountabiIity. There is a Securities AppeIIate TribunaI which is a three-member
tribunaI and is presentIy headed by a former Chief Justice of a High court - Mr. Justice
NK Sodhi. A second appeaI Iies directIy to the Supreme Court.
SEBI has enjoyed success as a reguIator by pushing systemic reforms aggressiveIy and
successiveIy (e.g. the quick movement towards making the markets eIectronic and
paperIess roIIing settIement on T+2 basis). SEBI has been active in setting up the
reguIations as required under Iaw.
SEBI has aIso been instrumentaI in taking quick and effective steps in Iight of the gIobaI
meItdown and the Satyam fiasco.
[citation needed]
It had
increased the extent and quantity
of discIosures to be made by Indian corporate promoters. More recentIy, in Iight of the
gIobaI meItdown,it IiberaIised the takeover code to faciIitate investments by removing
reguIatory structures. In one such move, SEBI has increased the appIication Iimit for
retaiI investors to Rs 2 Iakh, from Rs 1 Iakh at present.

For the discharge of its functions efficientIy, SEBI has been invested with the necessary
powers which are:
to approve by~Iaws of stock exchanges.
to require the stock exchange to amend their by~Iaws.
inspect the books of accounts and caII for periodicaI returns from recognised stock
inspect the books of accounts of a financiaI intermediaries.
compeI certain companies to Iist their shares in one or more stock exchanges.
Ievy fees and other charges on the intermediaries for performing its functions.
grant Iicence to any person for the purpose of deaIing in certain areas.
deIegate powers exercisabIe by it.
prosecute and judge directIy the vioIation of certain provisions of the companies Act.
[edit]SEBI Committees
TechnicaI Advisory Committee
Committee for review of structure of market infrastructure institutions
Members of the Advisory Committee for the SEBI Investor Protection and Education
Takeover ReguIations Advisory Committee
Primary Market Advisory Committee (PMAC)
Secondary Market Advisory Committee (SMAC)
MutuaI Fund Advisory Committee
Corporate Bonds & Securitization Advisory Committee
Takeover PaneI
SEBI Committee on DiscIosures and Accounting Standards (SCODA)
High Powered Advisory Committee on consent orders and compounding of offences
Derivatives Market Review Committee
Committee on Infrastructure Funds

The Direct Taxes Code (DTC) is said to repIace the existing Indian Income Tax Act, 1961.
approved, the DTC shaII come into force on the ApriI 1, 2012, and shaII be appIicabIe for
income earned during the financiaI year 2012-13.
AIthough beIow expectations, experts
see proposaIs as IargeIy positive.

[edit]HighIights of the Direct Taxes Code biII

Common threshoId income tax exemption Iimit for men and women proposed at Rs. 2
Iakh per annum, up from Rs. 1.6 Iakh
10 per cent tax on annuaI income between Rs. 2-5 Iakh, 20 per cent on between Rs. 5-10
Iakh, 30 per cent for above Rs. 10 Iakh
Tax burden at highest IeveI wiII come down by Rs. 41,040 annuaIIy
ProposaI to raise tax exemption for senior citizens to Rs. 2.5 Iakh from Rs. 2.4 Iakh
Corporate tax to remain at 30 per cent but without surcharge and cess
MAT to be 20 per cent of book profit, up from 18.5 per cent
ProposaI to Ievy dividend distribution tax at 15 per cent
Exemption for investment in approved funds and insurance schemes proposed at Rs. 1.5
Iakh annuaIIy, against Rs. 1.2 Iakh currentIy
Proposed biII has 319 sections and 22 scheduIes against 298 sections and 14 scheduIes
in existing IT Act
Once enacted, DTC wiII repIace archaic Income Tax Act.
[edit]SaIient features
DTC removes most of the categories of exempted income. Equity MutuaI Funds (ELSS),
Term deposits, NSC (NationaI Savings certificates), Unit Linked Insurance PIans (ULIPs),
Long term infrastructures bonds, house Ioan principaI repayment, stamp duty and
registration fees on purchase of house property wiII Iose tax benefits.
OnIy haIf of Short-term capitaI gains wiII be taxed
Surcharge and education cess are aboIished.
For incomes arising of House Property: Deductions for Rent and Maintenance wouId be
reduced from 30% to 20% of the Gross Rent. AIso aII interest paid on house Ioan for a
rented house is deductibIe from rent.
Tax exemption on Education Ioan to continue.
Tax exemption on LTA (Ieave traveI aIIowance) is aboIished.
Taxation of CapitaI gains from property saIe : For saIe within one year, gain is to be
added to taxabIe saIary.
Tax on dividends: Dividends wiII attract 5% tax.
MedicaI reimbursement : Max Iimit for medicaI reimbursements has been increased to
50,000 per year from current 15,000 Iimit.

Reserve Bank of India
From Wikipedia, the free encycIopedia
keserve 8ank of Ind|a

Sea| of k8I 1he k8I headquarters |n Mumba|

neadquarters Mumba| Maharashtra
1893337N 72836201LCoord|nates
1893337N 72836201L
Lstab||shed 1 Apr|| 193S
Governor Duvvur| Subbarao
Centra| bank of Ind|a
Currency Ind|an kupee
ISC 4217 Code INk
keserves US530021 b||||on (2010
8ase borrow|ng
8ase depos|t rate 600
Webs|te rb|org|n
The Reserve Bank of India (RBI) (Hindi: ||"| +) is the centraI banking institution
of India and controIs the monetary poIicy of the rupee as weII as US$300.21 biIIion
of currency reserves. The institution was estabIished on 1 ApriI 1935 during
the British Raj in accordance with the provisions of the Reserve Bank of India Act, 1934.
The share capitaI was divided into shares of Rs. 100 each fuIIy paid which was entireIy
owned by private sharehoIders in the beginning.
Reserve Bank of India pIays an
important part in the deveIopment strategy of the government. It is a member bank of
the Asian CIearing Union. Reserve Bank of India was nationaIised in the year 1949. The
generaI superintendence and direction of the Bank is entrusted to CentraI Board of
Directors of 20 members, the Governor and four Deputy Governors, one Government
officiaI from the Ministry of Finance, ten nominated Directors by the Government to give
representation to important eIements in the economic Iife of the country, and four
nominated Directors by the CentraI Government to represent the four IocaI Boards with
the headquarters at Mumbai, KoIkata, Chennai and New DeIhi. LocaI Boards consist of
five members each CentraI Government appointed for a term of four years to represent
territoriaI and economic interests and the interests of co-operative and indigenous banks
1 n|story
11 193S19S0
12 19S01960
13 19601969
14 1969198S
1S 198S1991
16 19912000
17 S|nce 2000
2 Structure
21 Centra| 8oard of D|rectors
22 Governors
23 Support|ve bod|es
24 Cff|ces and branches
3 Ma|n funct|ons
31 8ank of Issue
32 Monetary author|ty
33 Manager of exchange contro|
3S Issuer of currency
36 M|n|mum keserve System r|nc|p|e of Currency Note Issue
37 Deve|opmenta| ro|e
38 ke|ated funct|ons
4 o||cy rates and keserve rat|os
S Iurther read|ng
6 Lxterna| ||nks
7 keferences
The centraI bank was founded in 1935 to respond to economic troubIes after the first
worId war.
The Reserve Bank of India was set up on the recommendations of the HiIton-
Young Commission. The commission submitted its report in the year 1926, though the
bank was not set up for another nine years. The PreambIe of the Reserve Bank of India
describes the basic functions of the Reserve Bank as to reguIate the issue of bank notes,
to keep reserves with a view to securing monetary stabiIity in India and generaIIy to
operate the currency and credit system in the best interests of the country. The CentraI
Office of the Reserve Bank was initiaIIy estabIished in KoIkata, BengaI, but was
permanentIy moved to Mumbai in 1937. The Reserve Bank continued to act as the centraI
bank for Myanmar tiII Japanese occupation of Burma and Iater up to ApriI 1947, though
Burma seceded from the Indian Union in 1937. After partition, the Reserve Bank served
as the centraI bank forPakistan untiI June 1948 when the State Bank of
Pakistan commenced operations. Though originaIIy set up as a sharehoIders' bank, the
RBI has been fuIIy owned by the government of India since its nationaIization in 1949.

Between 1950 and 1960, the Indian government deveIoped a centraIIy pIanned economic
poIicy and focused on the agricuIturaI sector. The administration nationaIized
commerciaI banks
and estabIished, based on the anking Companies Act, 1949 (Iater
caIIed anking Regulation Act) a centraI bank reguIation as part of the RBI. Furthermore,
the centraI bank was ordered to support the economic pIan with Ioans.

As a resuIt of bank crashes, the reserve bank was requested to estabIish and monitor a
deposit insurance system. It shouId restore the trust in the nationaI bank system and
was initiaIized on 7 December 1961. The Indian government founded funds to promote
the economy and used the sIogan DeveIoping Banking. The Government of India
restructured the nationaI bank market and nationaIized a Iot of institutes. As a resuIt, the
RBI had to pIay the centraI part of controI and support of this pubIic banking sector.
Between 1969 and 1980, the Indian government nationaIized 6 more commerciaI banks,
foIIowing 14 major commerciaI banks being nationaIized in 1969(As mentioned in RBI
website). The reguIation of the economy and especiaIIy the financiaI sector was
reinforced by the Government of India in the 1970s and 1980s.
The centraI bank became
the centraI pIayer and increased its poIicies for a Iot of tasks Iike interests, reserve ratio
and visibIe deposits.
The measures aimed at better economic deveIopment and had a
huge effect on the company poIicy of the institutes. The banks Ient money in seIected
sectors, Iike agri-business and smaII trade companies.

The branch was forced to estabIish two new offices in the country for every newIy
estabIished office in a town.
The oiI crises in 1973 resuIted in increasing infIation, and
the RBI restricted monetary poIicy to reduce the effects.
A Iot of committees anaIysed the Indian economy between 1985 and 1991. Their resuIts
had an effect on the RBI. The oard for Industrial and Financial Reconstruction,
the Indira Gandhi Institute of Development Research and the Security & Exchange oard
of India investigated the nationaI economy as a whoIe, and the security and exchange
board proposed better methods for more effective markets and the protection of investor
interests. The Indian financiaI market was a Ieading exampIe for so-caIIed "financiaI
repression" (Mackinnon and Shaw).
The Discount and Finance House of India began its
operations on the monetary market in ApriI 1988; the National Housing ank, founded in
JuIy 1988, was forced to invest in the property market and a new financiaI Iaw improved
the versatiIity of direct deposit by more security measures and IiberaIisation.

The nationaI economy came down in JuIy 1991 and the Indian rupee was devaIued.
currency Iost 18% reIative to the US doIIar, and the Narsimahmam Committee advised
restructuring the financiaI sector by a temporaI reduced reserve ratio as weII as the
statutory Iiquidity ratio. New guideIines were pubIished in 1993 to estabIish a private
banking sector. This turning point shouId reinforce the market and was often caIIed neo-
The centraI bank dereguIated bank interests and some sectors of the financiaI
market Iike the trust and property markets.
This first phase was a success and the
centraI government forced a diversity IiberaIisation to diversify owner structures in

The NationaI Stock Exchange of India took the trade on in June 1994 and the RBI aIIowed
nationaIized banks in JuIy to interact with the capitaI market to reinforce their capitaI
base. The centraI bank founded a subsidiary company-theharatiya Reserve ank Note
Mudran Limited-in February 1995 to produce banknotes.

[edit]Since 2000
The Foreign Exchange Management Act from 1999 came into force in June 2000. It
shouId improve the foreign exchange market, internationaI investments in India and
transactions. The RBI promoted the deveIopment of the financiaI market in the Iast years,
aIIowed onIine banking in 2001 and estabIished a new payment system in 2004 - 2005
(NationaI EIectronic Fund Transfer).
The Security Printing & Minting Corporation of India
Ltd., a merger of nine institutions, was founded in 2006 and produces banknotes and

The nationaI economy's growth rate came down to 5.8% in the Iast quarter of 2008 -
and the centraI bank promotes the economic deveIopment.

[edit]CentraI Board of Directors
The CentraI Board of Directors is the main committee of the centraI bank. The Government
of India appoints the directors for a four-year term. The Board consists of a governor, four
deputy governors, four directors to represent the regionaI boards, and ten other
directors from various fieIds.
The centraI bank tiII now was governed by 21 governors. The 22nd, Current Governor of
Reserve Bank of India is Dr. D. Subbarao
[edit]Supportive bodies
The Reserve Bank of India has four regionaI representations: North in New DeIhi, South
in Chennai, East in KoIkata and West in Mumbai. The representations are formed by five
members, appointed for four years by the centraI government and serve - beside the
advice of the CentraI Board of Directors - as a forum for regionaI banks and to deaI with
deIegated tasks from the centraI board.
The institution has 22 regionaI offices.
The oard of Financial Supervision (BFS), formed in November 1994, serves as a CCBD
committee to controI the financiaI institutions. It has four members, appointed for two
years, and takes measures to strength the roIe of statutory auditors in the financiaI
sector, externaI monitoring and internaI controIIing systems.
The Tarapore committee was set up by the Reserve Bank of India under the chairmanship
of former RBI deputy governor S S Tarapore to "Iay the road map" to capitaI account
convertibiIity. The five-member committee recommended a three-year time frame for
compIete convertibiIity by 1999-2000.
On 1 JuIy 2007, in an attempt to enhance the quaIity of customer service and strengthen
the grievance redressaI mechanism, the Reserve Bank of India constituted a new
department - Customer Service Department (CSD).
[edit]Offices and branches
The Reserve Bank of India has 4 regionaI offices,15 branches and 5 sub-offices.
It has
22 branch offices at most state capitaIs and at a few major cities in India. Few of them are
in Ahmedabad, BangaIore, BhopaI, Bhubaneswar,Chandigarh, Chennai, DeIhi, Guwahati, Hyderab
ad, Jaipur, Jammu, Kanpur, KoIkata, Lucknow, Mumbai, Nagpur, Patna,
and Thiruvananthapuram. Besides it has sub-offices
at AgartaIa, Dehradun, Gangtok, Kochi, Panaji, Raipur, Ranchi,ShimIa and Srinagar.
The bank has aIso two training coIIeges for its officers, viz. Reserve Bank Staff CoIIege at
Chennai and CoIIege of AgricuIturaI Banking at Pune. There are aIso four ZonaI Training
Centres at BeIapur, Chennai, KoIkata and New DeIhi.
[edit]Main functions
[edit]Bank of Issue
Under Section 22 of the Reserve Bank of India Act, the Bank has the soIe right to issue
bank notes of aII denominations. The distribution of one rupee notes and coins and smaII
coins aII over the country is undertaken by the Reserve Bank as agent of the
Government. The Reserve Bank has a separate Issue Department which is entrusted with
the issue of currency notes. The assets and IiabiIities of the Issue Department are kept
separate from those of the Banking Department. OriginaIIy, the assets of the Issue
Department were to consist of not Iess than two-fifths of goId coin, goId buIIion or
sterIing securities provided the amount of goId was not Iess than Rs. 40 crores in vaIue.
The remaining three-fifths of the assets might be heId in rupee coins, Government of
India rupee securities, eIigibIe biIIs of exchange and promissory notes payabIe in India.
Due to the exigencies of the Second WorId War and the post-was period, these
provisions were considerabIy modified. Since 1957, the Reserve Bank of India is required
to maintain goId and foreign exchange reserves of Rs. 200 crores, of which at Ieast Rs.
115 crores shouId be in goId. The system as it exists today is known as the minimum
reserve system.
[edit]Monetary authority
The Reserve Bank of India is the main monetary authority of the country and beside that
the centraI bank acts as the bank of the nationaI and state governments. It formuIates,
impIements and monitors the monetary poIicy as weII as it has to ensure an adequate
fIow of credit to productive sectors. Objectives are maintaining price stabiIity and
ensuring adequate fIow of credit to productive sectors. The nationaI economy depends
on the pubIic sector and the centraI bank promotes an expansive monetary poIicy to
push the private sector since the financiaI market reforms of the 1990s.

The institution is aIso the reguIator and supervisor of the financiaI system and
prescribes broad parameters of banking operations within which the country's banking
and financiaI system functions. Objectives are to maintain pubIic confidence in the
system, protect depositors' interest and provide cost-effective banking services to the
pubIic. The anking Ombudsman Schemehas been formuIated by the Reserve Bank of
India (RBI) for effective addressing of compIaints by bank customers. The RBI controIs
the monetary suppIy, monitors economic indicators Iike thegross domestic product and
has to decide the design of the rupee banknotes as weII as coins.

[edit]Manager of exchange controI
The centraI bank manages to reach the goaIs of the Foreign Exchange Management Act,
1999. Objective: to faciIitate externaI trade and payment and promote orderIy
deveIopment and maintenance of foreign exchange market in India.
[edit]Issuer of currency
The bank issues and exchanges or destroys currency and coins not fit for circuIation.
The objectives are giving the pubIic adequate suppIy of currency of good quaIity and to
provide Ioans tocommerciaI banks to maintain or improve the GDP. The basic objectives of
RBI are to issue bank notes, to maintain the currency and credit system of the country to
utiIize it in its best advantage, and to maintain the reserves. RBI maintains the economic
structure of the country so that it can achieve the objective of price stabiIity as weII as
economic deveIopment, because both objectives are diverse in themseIves.
[edit]Minimum Reserve System - PrincipIe of Currency Note Issue
RBI can issue currency notes as much as the country requires, provided it has to make a
security deposit of Rs. 200 crores, out of which Rs. 115 crores must be in goId and Rs. 85
crores must be FOREX Reserves. This principIe of currency notes issue is known as the
'Minimum Reserve System'.
[edit]DeveIopmentaI roIe
The centraI bank has to perform a wide range of promotionaI functions to support
nationaI objectives and industries.
The RBI faces a Iot of inter-sectoraI and IocaI
infIation-reIated probIems. Some of this probIems are resuIts of the dominant part of the
pubIic sector.

[edit]ReIated functions
The RBI is aIso a banker to the government and performs merchant banking function for
the centraI and the state governments. It aIso acts as their banker. The NationaI Housing
Bank (NHB) was estabIished in 1988 to promote private reaI estate acquisition.
institution maintains banking accounts of aII scheduIed banks, too.
There is now an internationaI consensus about the need to focus the tasks of a centraI
bank upon centraI banking. RBI is far out of touch with such a principIe, owing to the
sprawIing mandate described above.
[edit]PoIicy rates and Reserve ratios
o||cy rates keserve rat|os |end|ng and depos|t rates as of 2S Cctober 2011
8ank kate 60
kepo kate 8S0
keverse kepo kate 7S0
Cash keserve kat|o (Ckk) 60
Statutory L|qu|d|ty kat|o (SLk) 240
8ase kate 9S0107S
keserve 8ank kate 4
Depos|t kate 8S09S0
Bank Rate: RBI Iends to the commerciaI banks through its discount window to heIp the
banks meet depositor's demands and reserve requirements. The interest rate the RBI
charges the banks for this purpose is caIIed bank rate. If the RBI wants to increase the
Iiquidity and money suppIy in the market, it wiII decrease the bank rate and if it wants to
reduce the Iiquidity and money suppIy in the system, it wiII increase the bank rate. As of
5 May, 2011 the bank rate was 6%.
Cash Reserve Ratio (CRR): Every commerciaI bank has to keep certain minimum cash
reserves with RBI. RBI can vary this rate between 3% and 15%. RBI uses this tooI to
increase or decrease the reserve requirement depending on whether it wants to affect a
decrease or an increase in the money suppIy. An increase in Cash Reserve Ratio (CRR)
wiII make it mandatory on the part of the banks to hoId a Iarge proportion of their
deposits in the form of deposits with the RBI. This wiII reduce the size of their deposits
and they wiII Iend Iess. This wiII in turn decrease the money suppIy. The current rate is
Statutory Liquidity Ratio (SLR): Apart from the CRR, banks are required to maintain Iiquid
assets in the form of goId, cash and approved securities. Higher Iiquidity ratio forces
commerciaI banks to maintain a Iarger proportion of their resources in Iiquid form and
thus reduces their capacity to grant Ioans and advances, thus it is an anti-infIationary
impact. A higher Iiquidity ratio diverts the bank funds from Ioans and advances to
investment in government and approved securities.
In weII-deveIoped economies, centraI banks use open market operations--buying and
seIIing of eIigibIe securities by centraI bank in the money market--to infIuence the voIume
of cash reserves with commerciaI banks and thus infIuence the voIume of Ioans and
advances they can make to the commerciaI and industriaI sectors. In the open money
market, government securities are traded at market reIated rates of interest. The RBI is
resorting more to open market operations in the more recent years.
GeneraIIy RBI uses three kinds of seIective credit controIs:
Minimum margins for Iending against specific securities.
CeiIing on the amounts of credit for certain purposes.
Discriminatory rate of interest charged on certain types of advances.
Direct credit controIs in India are of three types:
Part of the interest rate structure i.e. on smaII savings and provident funds, are
administrativeIy set.
Banks are mandatoriIy required to keep 24% of their deposits in the form of government
Banks are required to Iend to the priority sectors to the extent of 40% of their advances.

President Pratibha PatiI [ Images ] has approved the conferment of Padma Awards 2011.
This year the President has approved 128 awards, incIuding one duo case (counted as
one) and 12 in the category of Foreigners/ NRIs/ PIOs/ Posthumous. These
comprise 13 Padma Vibhushan, 31 Padma Bhushan and84 Padma Shri Awards. There are
31 Iadies among the awardees.

SI.No. Name DiscipIine
State /
1. Dr. (Smt.) KapiIa Vatsyayan Art - Art Administration and
2. Mrs. Homai VyarawaIIa Art - Photography Gujarat
3. Shri A Nageshwara Rao Art- Cinema Andhra
4. Shri Parasaran Kesava Iyengar PubIic Affairs DeIhi
5. Dr. AkhIaq-ur-Rehman Kidwai PubIic Affairs DeIhi
6. Shri Vijay KeIkar PubIic Affairs DeIhi
7. Shri Montek Singh AhIuwaIia PubIic Affairs DeIhi
8. Shri PaIIe Rama Rao Science and Engineering Andhra
9. Shri Azim Premji Trade and Industry Karnataka
10. Shri Brajesh Mishra CiviI Services Madhya
11. Prof. (Dr.) OttapIakkaI
NeeIakandan VeIu Kurup
Literature and Education KeraIa
12. Dr. Sitakant Mahapatra Literature and Education Orissa
13. Late Shri L. C. Jain PubIic Affairs DeIhi *

Padma Bhushan

SI.No. Name DiscipIine
State /
1. Shri Satyadev Dubey Art - Theatre Maharashtra
2. Shri Mohammed Zahur Khayyam
Hashmi aIias Khayyam
Art - Cinema - Music Maharashtra
3. Shri Shashi Kapoor Art - Cinema Maharashtra
4. Shri Krishen Khanna Art - Painting Haryana
5. Shri Madavur Vasudevan Nair Art - Dance - KathakaIi KeraIa
6. Ms. Waheeda Rehman Art - Cinema Maharashtra
7. Shri Rudrapatna Krishna Shastry
Art - Music-VocaI Karnataka
8. Ms. Arpita Singh Art - Painting DeIhi
9. Dr. Sripathi PanditharadhyuIa
Art - PIayback Singing,
Music Direction & acting
TamiI Nadu
10. Shri C.V. Chandrasekhar Art - CIassicaI Dance-
TamiI Nadu
11. Shri Dwijen Mukherjee Art West BengaI
12. Smt. Rajashree BirIa SociaI work Maharashtra
13. Mrs. Shobhana Ranade SociaI work Maharashtra
14. Dr. Suryanarayanan
Science and Engineering TamiI Nadu
15. Shri S.(Kris) GopaIakrishnan Trade and Industry Karnataka
16. Shri Yogesh Chander Deveshwar Trade and Industry West BengaI
17. Ms. Chanda Kochhar Trade and Industry Maharashtra
18. Dr. K. Anji Reddy Trade and Industry-
19. Shri AnaIjit Singh Trade and Industry DeIhi
20. Shri Rajendra Singh Pawar Trade and Industry Haryana
21. Dr. Gunapati Venkata Krishna
Trade and Industry Andhra
22. Shri Ajai Chowdhary Trade and Industry DeIhi
23. Shri Surendra Singh CiviI Services DeIhi
24. Shri M. N .Buch CiviI Services Madhya
25. Shri Shyam Saran CiviI Services DeIhi
26. Shri ThayiI Jacob Sony George Literature and Education Karnataka
27. Dr. Ramdas Madhava Pai Literature and Education Karnataka
28. Shri Sankha Ghosh Literature and Education West BengaI
29. Late Shri K. Raghavan
Medicine - Ayurveda. KeraIa*
30. Late Dr. Keki Byramjee Grant Medicine - CardioIogy Maharashtra *
31. Late Shri Dashrath PateI Art Gujarat *

Padma Shri
SI.No. Name DiscipIine State / DomiciIe
1. Ms. NeeIam Mansingh
Art - Theatre Chandigarh
2. Shri Makar Dhwaja Darogha Art- Chhau Dance Jharkhand
3. Shri Shaji NeeIakantan Karun Art - FiIm Direction KeraIa
4. Shri Girish KasaravaIIi Art - FiIm making Karnataka
5. Ms. Tabassum Hashmi Khan
aIias Tabu
Art - Cinema Maharashtra
6. Shri Jivya Soma Mase Art - WarIi Painting Maharashtra
7. Guru (Ms.) M.K. Saroja Art - Dance- Bharatnatyam TamiI Nadu
8. Shri Jayaram Subramaniam Art - Cinema TamiI Nadu
9. Pandit Ajoy Chakraborty Art - Music-Indian CIassicaI
West BengaI
10. Smt. Mahasundari Devi Art - MithiIia/ Madhubani
11. Shri Gajam Govardhana Art - HandIoom Weaving Andhra Pradesh
12. Ms. Sunayana HazariIaI Art - Dance - Kathak Maharashtra
13. Shri S.R. Janakiraman Art - Carnatic VocaI Music TamiI Nadu
14. Shri Peruvanam Kuttan Marar Art - Chenda MeIam- Drum
15. Smt. KaIamandaIam
Kshemavathy Pavithran
Art - Dance - Mohiniattam KeraIa
16. Shri Dadi Dorab Pudumjee Art - Puppetry DeIhi
17. Shri Khangembam Mangi
Art - TraditionaI Music of
Manipur (Pena)
18. Shri PrahIad Singh Tipaniya Art - FoIk Music Madhya
19. Smt. Usha Uthup Art - Music. West BengaI
20. Smt. KajoI Art- Cinema Maharashtra
21. Shri Irfan Khan Art- Cinema Maharashtra
22. Shri Mamraj AgrawaI SociaI work West BengaI
23. Shri Jockin Arputham SociaI work Maharashtra
24. Ms. Nomita Chandy SociaI work Karnataka
25. Ms. SheeIa PateI SociaI work Maharashtra
26. Ms. Anita Reddy SociaI work Karnataka
27. Shri Kanubhai Hasmukhbhai
SociaI work Gujarat
28. Shri Anant Darshan Shankar PubIic Affairs Karnataka
29. Prof. M. AnnamaIai Science and Engineering Karnataka
30. Dr. Mahesh Haribhai Mehta Science and Engineering -
AgricuIturaI Science
31. Shri Coimbatore Narayana
Rao Raghavendran
Science and Engineering TamiI Nadu
32. Dr. (Mrs.) Suman Sahai Science and Engineering DeIhi
33. Prof.(Dr.) E.A. Siddiq Science and Engineering -
AgricuIturaI Science
Andhra Pradesh
34. Shri GopaIan Nair Shankar Science and Engineering -
35. Shri Mecca Rafeeque Ahmed Trade and Industry TamiI Nadu
36. Shri KaiIasam Raghavendra
Trade and Industry TamiI Nadu
37. Shri Narayan Singh Bhati CiviI Services Andhra Pradesh
38. Shri P K Sen CiviI Services Bihar
39. Ms. ShitaI Mahajan Sports - Adventure Sports-
Para Jumping
40. Ms. Nameirakpam Kunjarani
Sports - WeightIifting Manipur
41. Shri SushiI Kumar Sports - WrestIing DeIhi
42. Shri Vangipurapu Venkata
Sai Laxman
Sports - Cricket Andhra Pradesh
43. Shri Gagan Narang Sports - Shooting Andhra Pradesh
44. Smt. Krishna Poonia Sports - Discus Throw Rajasthan
45. Shri Harbhajan Singh Sports - Mountaineering Punjab
46. Dr. Pukhraj Bafna Medicine - Padeatrics Chhattisgarh
47. Prof. Mansoor Hasan Medicine- CardioIogy Uttar Pradesh
48. Dr. Shyama Prasad MandaI Medicine - Orthopaedic DeIhi
49. Prof. (Dr.) Sivapatham VittaI Medicine - EndocrinoIogy TamiI Nadu
50. Prof. (Dr.) Madanur Ahmed Medicine - GastroenteroIogy TamiI Nadu
51. Dr. Indira Hinduja Medicine - Obstetrics and
52. Dr. Jose Chacko
Medicine - Cardio-Thoracic
53. Prof. (Dr.) A. Marthanda PiIIai Medicine - Neurosurgery KeraIa
54. Shri Mahim Bora Literature and Education Assam
55. Prof. (Dr.) PuIIeIIa Srirama
Literature and Education-
Andhra Pradesh
56. Dr. Pravin Darji Literature and Education Gujarat
57. Dr. Chandra Prakash DevaI Literature and Education Rajasthan
58. Shri BaIraj KomaI Literature and Education DeIhi
59. Mrs. Rajni Kumar Literature and Education DeIhi
60. Dr. Devanooru Mahadeva Literature and Education Karnataka
61. Shri Barun Mazumder Literature and Education West BengaI
62. Dr. Avvai Natarajan Literature and Education TamiI Nadu
63. Shri BhaIchandra Nemade Literature and Education HimachaI
64. Prof. Riyaz Punjabi Literature and Education Jammu and
65. Prof. Koneru Ramakrishna
Literature and Education Andhra Pradesh
66. Ms. Buangi SaiIo Literature and Education Mizoram
67. Prof. Devi Dutt Sharma Literature and Education Uttarakhand
68. Shri NiIamber Dev Sharma Literature and Education Jammu and
69. Ms. Urvashi ButaIia # Literature and Education DeIhi
70. Ms. Ritu Menon # Literature and Education DeIhi
71. Prof. Krishna Kumar Literature and Education DeIhi
72. Shri Deviprasad Dwivedi Literature and Education Uttar Pradesh
73. Ms. Mamang Dai Literature and Education ArunachaI
74. Dr. Om Prakash AgrawaI Others - Heritage Conservation Uttar Pradesh
75. Prof. Madhukar Keshav
Others - ArcheoIogy Maharashtra
76. Ms. Shanti Teresa Lakra Others-Nursing Andaman &
77. Smt. GuIshan Nanda Others - Handicrafts promotion DeIhi
78. Dr. Azad Moopen SociaI work UAE *
79. Prof. Upendra Baxi PubIic Affairs -LegaI Affairs United Kingdom
80. Dr. Mani LaI Bhaumik Science and Engineering USA *
81. Dr. Subra Suresh Science and Engineering USA *
82. Prof. KarI Harrington Potter Literature and Education USA *
83. Prof. Martha Chen SociaI work USA *
84. Shri SatpaI Khattar Trade and Industry Singapore *
85. Shri GranviIIe Austin Literature and Education USA *
List of Bharat Ratna Awardees
1. Pandit Bhimsen Joshi (2008)
2. Kumari Lata Dinanath Mangeshkar (2001)
3. Ustad BismiIIah Khan (2001)
4. Prof. Amartya Sen (1999)
5. Lokpriya Gopinath BordoIoi (1999)
6. Loknayak Jayprakash Narayan (1999)
7. Pandit Ravi Shankar (1999)
8. Shri Chidambaram Subramaniam (1998)
9. Smt. Madurai Shanmukhavadivu SubbuIakshmi (1998)
10. Shri (Dr.) AvuI Pakir JainuIabdeen AbduI KaIam (1997)
11. Smt. Aruna Asaf AIi (1997)
12. Shri GuIzari LaI Nanda (1997)
13. Shri Jehangir Ratanji Dadabhai Tata (1992)
14. Shri MauIana AbuI KaIam Azad (1992)
15. Shri Satyajit Ray (1992)
16. Shri Morarji Ranchhodji Desai (1991)
17. Shri Rajiv Gandhi (1991)
18. Sardar VaIIabhbhai PateI (1991)
19. Dr. Bhimrao Ramji Ambedakr (1990)
20. Dr. NeIson RoIihIahIa MandeIa (1990)
21. Shri Marudur GopaIan Ramachandran (1988)
22. Khan AbduI Ghaffar Khan (1987)
23. Shri Acharya Vinoba Bhave (1983)
24. Mother Teresa (Agnes Gonxha Bojaxhiu) (1980)
25. Shri Kumaraswamy Kamraj (1976)
26. Shri Varahagiri Venkata Giri (1975)
27. Smt. Indira Gandhi (1971)
28. Shri LaI Bahadur Shastri (1966)
29. Dr. Pandurang Vaman Kane (1963)
30. Dr. Zakir Hussain (1963)
31. Dr. Rajendra Prasad (1962)
32. Dr. Bidhan Chandra Roy (1961)
33. Shri Purushottam Das Tandon (1961)
34. Dr. Dhonde Keshav Karve (1958)
35. Pt. Govind BaIIabh Pant (1957)
36. Dr. Bhagwan Das (1955)
37. Shri JawaharIaI Nehru (1955)
38. Dr. Mokshagundam Vivesvaraya (1955)
39. Shri Chakravarti RajagopaIachari (1954)
40. Dr. Chandrasekhara Venkata Raman (1954)
41. Dr. SarvapaIIi Radhakrishnan (1954)
Foreign exchange market
From Wikipedia, the free encycIopedia
Forex redirects here. For the football club, see FC Forex raov.
Foreign exchange
Exchange rates
Currency band
Exchange rate
Exchange rate regime
Exchange rate flexibility
Fixed exchange rate
Floating exchange rate
Linked exchange rate
Managed float regime
Foreign exchange market
Futures exchange
Retail forex
Currency future
Non-deliverable forward
Forex swap
Currency swap
Foreign exchange option
Historical agreements
Bretton Woods Conference
Smithsonian Agreement
Plaza Accord
Louvre Accord
See also
Bureau de change /
currency exchange (office)
Hard currency
The foreign exchange market (forex, FX, or currency market) is a gIobaI, worIdwide
decentraIized financiaI market for trading currencies. FinanciaI centers around the worId
function as anchors of trading between a wide range of different types of buyers and
seIIers around the cIock, with the exception of weekends. The foreign exchange market
determines the reIative vaIues of different currencies.

The foreign exchange market assists internationaI trade and investment, by
enabIing currency conversion. For exampIe, it permits a business in the United States to
import goods from the United Kingdomand pay pound sterIing, even though its income is
in United States doIIars. It aIso supports direct specuIation in the vaIue of currencies,
and the carry trade, specuIation on the change in interest rates in two currencies.

In a typicaI foreign exchange transaction, a party purchases a quantity of one currency
by paying a quantity of another currency. The modern foreign exchange market began
forming during the 1970s after three decades of government restrictions on foreign
exchange transactions (the Bretton Woods system of monetary management estabIished
the ruIes for commerciaI and financiaI reIations among the worId's major industriaI states
after WorId War II), when countries graduaIIy switched to fIoating exchange rates from
the previous exchange rate regime, which remained fixed as per the Bretton Woods
The foreign exchange market is unique because of
its huge trading voIume representing the Iargest asset cIass in the worId Ieading to
high Iiquidity;
its geographicaI dispersion;
its continuous operation: 24 hours a day except weekends, i.e. trading from
20:15 GMT on Sunday untiI 22:00 GMT Friday;
the variety of factors that affect exchange rates;
the Iow margins of reIative profit compared with other markets of fixed income; and
the use of Ieverage to enhance profit and Ioss margins and with respect to account size.
As such, it has been referred to as the market cIosest to the ideaI of perfect competition,
notwithstanding currency intervention by centraI banks. According to the Bank for
InternationaI SettIements,
as of ApriI 2010, average daiIy turnover in gIobaI foreign
exchange markets is estimated at $3.98 triIIion, a growth of approximateIy 20% over the
$3.21 triIIion daiIy voIume as of ApriI 2007. Some firms speciaIizing on foreign exchange
market had put the average daiIy turnover in excess of US$4 triIIion.

The $3.98 triIIion break-down is as foIIows:
$1.490 triIIion in spot transactions
$475 biIIion in outright forwards
$1.765 triIIion in foreign exchange swaps
$43 biIIion currency swaps
$207 biIIion in options and other products

AuxiIiary Services
Auxiliary Services


We provide gift cheques against cash for convey your
wishes to your nears and dears. These are issued
without any additional charge and payable at par at any
of our branches, they are available in the denomination
of Rs. 11, Rs. 21, Rs. 51 and Rs. 101. ift cheques are
valid for six months from the date of issue.
2.1 Demand Draft

Valid for six months from the date of issue, demand
drafts are issued on prescribed schedule of charge, on
any of our branches/on other banks where we have
2.2 Mail Transfer

Mail transfer is useful when amount is required to be
transferred from one branch to another branch of the
Bank for the credit of the account of the person. In case
of mail transfer the bank does not give any instrument
like demand draft to the remitter. An advice / Cash
Receipt is given to remitter and Bank takes responsible
of remitting and crediting the amount to payees account
and instrument is given to remitter, requiring nothing to
payee for getting payment. Service charges are as
schedule of charges.
2.3 Pay-Orders

Pay order/Bankers cheque are just like Demand Draft
with the exception that they are payable on the branch
of issue itself. Pay orders are valid for a period of 3
months from the date of issue
2.4 Telegraphic Transfer (T.T.)

Telegraphic transfer is a quicker mode of remittance of
funds than through mail transfer.


Outward Bills/ Cheques for Collection (OBC)
Inward Bills/ Cheques for Collection (IBC)

Cheques, bills, dividend warrants, interest warrants and
other instruments like term deposit receipts etc. payable
on other banks or branches of our Bank are collected
for our customers.

This facility is provided for safe keeping of valuables
through lockers at Bank's branches/extension counters.
An individual singly/jointly can hire a locker suitable to
his/her needs. The locker key remains with the hirer
(even one can put an additional lock). The rent rates
depends upon the locker size and period of hire.
Nomination facility is also available.

These facilities are available at competitive rates with
speedy and courteous services at our branches
designated for Foreign Exchange operations.

FinanciaI incIusion in India
The Reserve Bank of India has set up a commission (Khan Commission) in 2004 to Iook
into financiaI incIusion and the recommendations of the commission were incorporated
into the mid-term review of the poIicy (2005-06). In the report RBI exhorted the banks
with a view of achieving greater financiaI incIusion to make avaiIabIe a basic "no-friIIs"
banking account. In India, FinanciaI IncIusion first featured in 2005, when it was
introduced, that, too, from a piIot project in UT of Pondicherry, by K C Chakraborthy, the
chairman of Indian Bank. MangaIam ViIIage became the first viIIage in India where aII
househoIds were provided banking faciIities. In addition to this KYC (Know your
Customer) norms were reIaxed for peopIe intending to open accounts with annuaI
deposits of Iess than Rs. 50,000. GeneraI Credit Cards (GCC) were issued to the poor and
the disadvantaged with a view to heIp them access easy credit. In January 2006, the
Reserve Bank permitted commerciaI banks to make use of the services of non-
governmentaI organizations (NGOs/SHGs), micro-finance institutions and other civiI
society organizations as intermediaries for providing financiaI and banking services.
These intermediaries couId be used as business faciIitators (BF) or business
correspondents (BC) by commerciaI banks. The bank asked the commerciaI banks in
different regions to start a 100% financiaI incIusion campaign on a piIot basis. As a resuIt
of the campaign states or U.T.s Iike Puducherry, HimachaI Pradesh and KeraIa have
announced 100% financiaI incIusion in aII their districts. Reserve Bank of India's vision
for 2020 is to open nearIy 600 miIIion new customers' accounts and service them through
a variety of channeIs by Ieveraging on IT. However, iIIiteracy and the Iow income savings
and Iack of bank branches in ruraI areas continue to be a road bIock to financiaI
incIusion in many states. Apart from this there are certain in Current modeI which is
foIIowed. There is inadequate IegaI and financiaI structure. India, being a mostIy agrarian
economy, hardIy has schemes which Iend for agricuIture. AIong with microfinance we
need to focus on Microinsurance too.
[citation needed]

In its pIatinum jubiIee year, the Reserve Bank of India (RBI) wants to connect every
Indian to the country s banking system.
RBI is currentIy working on a three-year financiaI incIusion pIan and is discussing this
with each bank to see how to take this forward, KC Chakrabarty, deputy governor, RBI
"NearIy forty years after nationaIization of banks, 60% of the country's popuIation does
not have bank accounts and nearIy 90% do not get Ioans," he pointed out .
Despite heightened focus on financiaI incIusion, Indian banks stiII somewhat faiIed to
bring the under- and un-banked into the mainstream banking foId.
India has currentIy the second-highest number of financiaIIy excIuded househoIds in the
worId. ApproximateIy, 40% of India s popuIation have bank accounts, and onIy about
10% have any kind of Iife insurance cover, whiIe a meager 0.6% have non-Iife insurance
According to UNITED NATIONS, "A financiaI sector that provides 'access to credit for aII
"bankabIe " peopIe and firms and to savings and payments services for everyone .
IncIusive finance does not require that everyone who is eIigibIe use each of the services ,
but they shouId be abIe to choose use them if desired.
Rangarajan ) (2008) "The process of ensuring access to financiaI services and timeIy and
adequate credit where needed by vuInerabIe groups such as weaker sections and Iow
income groups at an affordabIe cost."
As per " TREASURY COMMITTEE , HOUSE OF COMMONS , UK , (2005) " AbiIity of
individuaIs to access appropriate financiaI products and services . "
'Major Three Aspects Of FinanciaI IncIusion' Make peopIe to
Access financiaI markets
Access credit markets
Learn financiaI matters (financiaI education )
FinanciaI IncIusion IncIudes Accessing Of FinanciaI Products And Services Like,
Savings faciIity
Credit and debit cards access
EIectronic fund transfer
AII kinds of commerciaI Ioans
Overdraft faciIity
Cheque faciIity
Payment and remittance services
Low cost financiaI services
Insurance (MedicaI insurance)
FinanciaI advice
Pension for oId age and investment schemes
Access to financiaI markets
Micro credit during emergency
EntrepreneuriaI credit
FinanciaIIy ExcIuded PeopIe The financiaIIy excIuded sections IargeIy comprise :
MarginaI farmers
LandIess Iabourers
OraI Iessees
SeIf empIoyed and unorganised sector enterprises
Urban sIum dweIIers
Ethnic minorities and sociaIIy excIuded groups
Senior citizens
The North East, Eastern and CentraI regions contain most of the financiaIIy excIuded
Factors affecting access to financiaI services
LegaI identity : Lack of IegaI identity Iike voter id , driving Iicense , birth certificates
,empIoyment identity card etc.
Limited Iiteracy : ParticuIarIy financiaI Iiteracy and Iack of basic education prevent peopIe
to have access from financiaI services .
LeveI of income : LeveI of income decides to have financiaI access . Low income peopIe
generaIIy have the attitude of thinking that banks are onIy for rich.
'%erms and conditions : While getting loans or at the time of opening accounts banks
places many conditions , so the uneducated and poor people find it very difficult to
access financial services .
CompIicated procedures : Due to Iack of financiaI Iiteracy and basic education , it is very
difficuIt for those peopIe who Iack both to read terms and conditions and account fiIIing
forms .
PsychoIogicaI and cuIturaI barriers : Many peopIe voIuntariIy excIuded themseIves due to
psychoIogicaI barriers and they think that they are excIuded from accessing financiaI
services .
PIace of Iiving : As the name suggests that commerciaI banks operate onIy in
commerciaIIy profitabIe areas and they set up branches and main offices onIy in that
areas .PeopIe who Iived in under deveIoped areas find it very difficuIt to go to areas in
which banks are generaIIy reside .
Lack of awareness : FinaIIy , peopIe who Iack basic education do not know the
importance of the financiaI products Iike Insurance , Finance , Bank Accounts , cheque
faciIity ,etc.
Consequences Of FinanciaI ExcIusion Major Two Threats :
Losing opportunities to grow : In the absence of finance , peopIe who are not connected
with formaI financiaI system Iack opportunities to grow.
Country's growth wiII retard : Due to vast unutiIized resources that is in the form of
money in the hands of peopIe who Iack financiaI incIusive services.
Other Consequences :
Business Ioss to banks : Banks wiII Ioss business if this condition persists for ever due
to Iack of opening of bank accounts.
ExcIusion from mainstream society : The peopIe who Iacks financiaI services , presumed
that they are excIuded from mainstream society .
AII transactions cannot be made in cash : Some transactions can be made in cash . In
this technoIogicaI worId everybody wants to have eIectronic cash system Iike debit and
credit cards and aIso EFT .
Loss of opportunities to thrift and borrow : FinanciaIIy excIuded peopIe , may Iose
chances to save their some part of IiveIihood earnings and aIso to borrow Ioans .
EmpIoyment barriers : Nowadays aII saIary and other financiaI benefits from various
sources Iike Governments schoIarships , any compensation , grants , reIiefs , etc. are
paid through bank accounts.
Loss due to theft : Banks provide various schemes of safety Iocker faciIity . It mitigates
the risk due to thefts .
Other aIIied financiaI services : PeopIe who do not have bank accounts may not go to
bank as for as possibIe . So they Iack basic financiaI auxiIiary services Iike DD ,Insurance
cover and other emergency need Ioans etc.
Benefits Of IncIusive FinanciaI Growth
Growth with equity : In the path of super power we the Indians wiII need to achieve the
growth of our country with equaIity . It is provided by incIusive finance.
Get rid of poverty : To remove poverty from the Indian context aII everybody wiII be given
access to formaI financiaI services . Because if they borrow Ioans for business or
education or any other purpose they get the Ioan wiII pave way for their deveIopment .
FinanciaI Transactions Made Easy : IncIusive finance wiII provide banking reIated
financiaI transactions in an easy and speedy way .
Safe savings aIong with financiaI services : PeopIe wiII have safe savings aIong with
other aIIied services Iike insurance cover , entrepreneuriaI Ioans , payment and
settIement faciIity etc.,
InfIating NationaI Income : Boosting up business opportunities wiII definiteIy increase
GDP and which wiII be refIected in our nationaI income growth .
Becoming GIobaI PIayer : FinanciaI access wiII attract gIobaI market pIayers to our
country that wiII resuIt in increasing empIoyment and business opportunities .
ReIationship between FinanciaI IncIusion and DeveIopment Indicators
Economic growth foIIows financiaI incIusion. In order to achieve the objective of growth
with equity, it is imperative that infrastructure is deveIoped with financiaI incIusion.
savings and credit accounts - indicators of financiaI incIusion.
per capita income - indicator of economic deveIopment
EIectricity consumption
and road Iength -indicators of infrastructure deveIopment.
AII the above infIuence economic deveIopment which foIIows adequate financiaI and
credit faciIities
Expectations of poor peopIe from financiaI system Taking into account their
SeasonaI InfIow Of Income from agricuIturaI operations,
Migration from one pIace to another,
SeasonaI And IrreguIar Work AvaiIabiIity And Income; the existing financiaI system
needs to be designed to suit their requirements.
Security and safety of deposits
Low transaction cost
Convenient operating time
Minimum paper work
Frequent deposits
Quick and easy access
Product suitabIe to income and consumption

The FinanciaI year 2010-11 has started off with a headIine infIation of 11.0 per cent in
ApriI 2010 in terms of WhoIesaIe Price Index on the revised base year. It remained doubIe
digit tiII June 2010 and then moderated to reach 8.6% in September 2010. The infIation
figures in terms of CPI have came down to singIe digit. For Iast two years, food prices
have been major drivers of the infIation. The Food Price InfIation is stiII chaIIenging the
Some anti-infIationary measures taken by the government are as foIIows:
1. A seIective ban on exports and futures trading in rice and some puIses
2. Announcement of zero import duty on seIect food items and removaI of restrictions on
Iicensing, stock Iimits and movement of food articIes
under the EssentiaI Commodities Act of 1955.
3. Permission was given to import of puIses and sugar by pubIic sector undertakings.
4. Distribution of imported puIses and edibIe oiIs was permitted through the PubIic
Distribution System (PDS) and a higher quota of non-Ievy
sugar was reIeased.


The important items of export to this region are textiles and ready made garments,
engineering goods such as bicycles and components thereof, mopeds, diesel engines, automotive
components, hand tools etc., chemical and allied items like fine chemicals, dye and dye
intermediates, tyres and tubes, rubber gloves. Besides, India also exports handicrafts items, sports
goods, electronic items, jute, shellac, tea and spices to Latin America.

India`s major imports from the region are iron & steel and their products, non-ferrous metals,
crude minerals, chemicals, PVC, pulp & paper waste, raw wool etc.
Import And Ixport Prodocts In Indiu
Import and export products in India are an immense way to infIate your business and a
best way to participate in the gIobaI economy. In reaIity, companies that do business
worIdwide grow more rapidIy and faiI Iess frequentIy than companies that don't. If you
are ready to start import and export products in India and become a part of internationaI
trade, then there are a number of government programs to heIp you get started. AIso,
there are strict set of Iaws for top import and exports in India.
Top import and export products in India bring new heights to the trade business, and
aIso contribute in the internationaI trading. However the business of top imports and
exports has become one of the newest commerciaI trends of this decade. According to a
survey, American companies trade in over 2.5 triIIion doIIars a year in commodities, of
which smaII businesses manage over 95 percent. As being the owner of a top import and
export products enterprise, you can work as a dispenser by focusing on exporting and
importing goods and services that cannot be achieved on nationaI soiI (e.g., Russian
caviar and French perfumes) or those that are economicaI when imported from other
countries (e.g., Chinese eIectronics). An Export Management Company can focus in one
industry or work with diverse types of import export manufacturers. This is a good
seIection for products that are assured to seII because of high demand or an estabIished
brand name. In contrast to other businesses, though, import export companies have a
very smaII startup cost. The top imports and exports in India have a growing Iist
depending upon the demand and suppIy of products in the country.
WhiIe the majority products can be exported without the need for Iicenses, some
speciaIized products or high-risk items, such as firearms or pharmaceuticaIs, may
necessitate speciaI government permits. If that's the case, costs may run significantIy
higher. Many top import and export products in India are reguIated by centraIized
agencies. If you import or export some specific types of products, you may be required
to obtain specific Iicenses and permits or compIete suppIementary paperwork.
These top imports and exports in India incIude products Iike:
AgricuIturaI products
Food and beverage products
IndustriaI goods
PharmaceuticaIs and biotechnoIogy
Defense products, etc

Top import and export products in India :
Living animaIs, miIk products, wheat, rice, coffee, tea, spices, cumin seed, tamarind
powder, sesame seed, sugar, henna, herbaI extract, medicines, fertiIizers, chemicaIs,
saIt, iron ores, mineraIs, books, Ieather products, textiIe, dyes and pigments, home
furnishing, footwear, brass items, AIuminium items, sanitary wear, ceramic, gIassware,
fIanges, fittings, embroidered and Zari items, pipe and pipe fittings, handicraft, cabIes,
medicaI disposabIes, Iaboratory equipments, surgicaI equipments, sports goods,
wooden furniture and various other engineering and eIectricaI products.
The mounting expenditures of the core income sections of the society have resuIted in
the imports of the country. The chief items of imports are:
CereaIs and preparations, FertiIizers, EdibIe OiI, Sugar, PuIp and waste paper, Paper,
Newsprint, Crude rubber, Non-ferrous MetaIs, MetaIIiferrous ores and metaI scrap, Iron
and SteeI, Crude PetroIeum and petroIeum products, PearIs, Precious and Semi-Precious
stones, Machinery, Project Goods, PuIses, CoaI and its derivatives, Non-metaIIic, Organic
& Inorganic chemicaIs, Dyeing, tanning materiaI, MedicinaI products and Pharma
products, ArtificiaI resins, yarn & fabrics(siIk, cotton, wooI), eIectronic goods, wood and
wood products, goId and siIver, essentiaI oiIs, computer software, etc
H|n|mum reserve system
The centra| bank keeps a m|n|mum reserve of go|d under the |aw. A max|mum ||m|t of note |s not f|xed. After keep|ng
the reserve any amount of money can be |ssued. Add|t|ona| |ssue of notes does not requ|re further meta|||c reserves.
Th|s method |s use |n Pak|stan after 0ecember 195.
|nd|a |s a|so app|y|ng |t s|nce 1957.
8outh Afr|ca has adopted |n 1930.
ho||and has been |ssu|ng notes under th|s method for so many years

Th|s method |s e|ast|c.
Expans|on and contract|on can be made at any t|me.
|t |s an econom|ca| system because new |ssue of notes does not demand |ncrease |n the go|d reserve.
Th|s method |s re||ab|e dur|ng f|nanc|a| cr|s|s and emergenc|es ||ke war, earth quake and f|oods.
Th|s method |s su|tab|e for poor and deve|op|ng countr|es.

There |s a danger of over |ssue wh|ch br|ngs |nf|at|on. The effect|ve use of monetary po||cy measures can show good
resu|t to contro| the |nf|at|on.

H|n|mum Reserve 8ystem |s present|y the po||cy of |nd|an Covt to |ssue currency notes.The task |s ass|gned to The
|ssue 0ept of R|.Under |t the dept. Hay |ssue any amount of notes,the on|y cond|t|on be|ng that |t a|ways ma|nta|ns
reserves cons|st|ng of a m|n|mum of Co|d and Iore|gn exchange to the extent of Rs 200 crore,of wh|ch go|d shou|d be
to the va|ue of Rs 115 crore.Thus the po||cy |s |nf|at|onary |n nature.
Ear||er the assets of the |ssue dept. were he|d on a proport|ona| system:
(|}at |east 407 of tota| assets cons|sts of go|d co|ns,go|d bu|||ons or 8ter||ng secur|t|es of wh|ch go|d va|ue shou|d be at
|east Rs 40 crore,and
(||}Rema|n|ng 07 of assets shou|d be |n rupee co|ns,rupee secur|t|es of C0| and e||g|b|e b|||s of exchange payab|e |n
Accord|ng to m|n|mum reserve system the centra| bank |s requ|red to keep on|y a m|n|mum amount of reserves |n the
fom of go|d and for|egn exchange secur|t|es.the centra| bank can expande the nots |ssuance accord|ng to vo|ume of
bus|ness act|v|tes w|th out back|ng of go|d.
The |eve| of currncy back|ng by go|d |s f|xed at Rs: 1200 m||||on |n pak|stan.

FY - 2011-12
For eneral Tax
For Women Tax
For Senior Citizens
Tax Slab(In
Tax (In
Tax Slab (In
Tax (In
Tax Slab (In
Tax (In
0-1,80,000 No Tax 0-1,90,000 No Tax 0-2,50,000 No Tax
5,00,001 -
5,00,001 -
5,00,001 -
FY - 2010-11
For eneral Tax
For Women Tax
For Senior Citizens
Tax Slab(In
Tax (In
Tax Slab (In
Tax (In
Tax Slab (In
Tax (In
0-1,60,000 No Tax 0-1,90,000 No Tax 0-2,40,000 No Tax
5,00,001 -
5,00,001 -
5,00,001 -
FY - 2009-10
For eneral Tax
For Women Tax
For Senior Citizens
Tax Slab(In
Tax (In
Tax Slab (In
Tax (In
Tax Slab (In
Tax (In
0-1,60,000 No Tax 0-1,90,000 No Tax 0-2,40,000 No Tax
5,00,001 -
5,00,001 -
5,00,001 -
FY - 2008-09
For eneral Tax
For Women Tax
For Senior Citizens
Tax Slab(In
Tax (In
Tax Slab (In
Tax (In
Tax Slab (In
Tax (In
0-1,50,000 No Tax 0-1,80,000 No Tax 0-2,25,000 No Tax
3,00,001 -
3,00,001 -
3,00,001 -
The particuIars of its organization, functions and duties

Service Tax was introduced in India in 1994 by Chapter V of the Finance Act, 1994. The
CentraI Board of Excise & Customs (CBEC), Department of Revenue, Ministry of Finance,
deaIs with the task of formuIation of poIicy concerning Ievy and coIIection of Service Tax.
The CBEC is assisted by the Directorate of Service Tax Iocated at Mumbai. The Service
Tax is being administered by various CentraI Excise Commissionerate spread across the
country. The jurisdiction of each Commissionerate has been specified vide Notf. No.
14/2002-CE(NT) as amended from time to time. However there are
six Commissionerates Iocated at metropoIitan cities of DeIhi, Mumbai, KoIkata, Chennai,
Ahmedabad and BangaIore which deaI excIusiveIy with work reIated to Service Tax.
These Commissioneratesare supervised by the jurisdictionaI Chief Commissionerate of
CentraI Excise. Each Commissionerate consists of 3 to 5 divisions with each division
consisting of a number of range offices.

II The powers and duties of its officers and empIoyees

The powers and duties of the officers are derived from the Chapter V of the
Finance Act 1994 and Service Tax RuIes 1994 and are as enumerated beIow:-

Commissioner (Group A) Head of Department powers
Adjudication *
CentraIized registration in r/o units Iocated within the jurisdiction of the
Powers of revision/review
Pre audit / post audit of rebate / refund cIaims.

Joint/AddI. Commissioner (Group A)
Adjudication *
Administrative supervision over Division

Asstt. Commissioner/Dy. Commissioner (Group A) Head of office powers
& Statutory powers under the Act
Adjudication *
ProvisionaI assessment
Sanctioning of rebate / refund cIaims.
Work reIated to audit / anti evasion.

* Adjudication powers are aIIocated with reference to monetary Iimits and have been
notified vide Notification No. 30/2005-ST dt. 10.8.05 consequent to amendment made in
the Finance Act, 2005.

Superintendent (Group B, Executive) Registration,
scrutiny of return
anti evasion checks / enquiries

lh0lA VA7 RA7E
India does not have any typical Value-Added Tax (VAT) structure. Instead
we have separate taxes on sale of goods and on rendering of services.
But whatever the present scenario exists today, VAT will soon replace the
existing sales tax in India. It will be levied according to the Value Added
Tax Act and the Rules made under it. The main point in which VAT differs
from the current single-point system of tax levy is that, under the present
system the manufacturer or importer of goods into a State is liable to sales
tax and there is no sales tax on the further distribution channel.Whereas
VAT is a multi-point levy on each of the entities in the supply chain with
the facility of set-off of input tax - that is, the tax paid at the stage of
purchase of goods by a trader and on purchase of raw materials by a
manufacturer. Only the value addition in the hands of each of the entities
is subject to tax.
Sales tax / state VAT is a tax which is payable by the vendor to the
Government but ordinarily, what the vendor does is that he extracts the
amount of such tax from the vendor as part of consideration for sale of
such goods thereby including the tax amount in the total consideration
moneypayable by the buyer.
Few necessary items like medicine, agricultural products & industrial
inputs have 4 VAT rates and rest have 2.. However the VAT charged
on gold and silver products are normally at the rate of . There are some
products where the VAT rates are charged as zero such as the goods
exported outside and the products manufactured on the business
centralized in the Special Economy Zone.
To calculate the VAT amount you can use any of the three methods detailed
The Subtraction method: - The rate of tax will be applicable to the
differentiation among the value of output and the cost of input.
The Addition method: The value added is worked out by adjoining all the
payments that should be paid to the factors of production (viz., wages,
salaries, interest payments etc).
Tax credit method: This requires set-off of the tax paid on inputs from
tax collected on sales.
In Ind|a the standard rate |s 14 wh||e the reduced rates are 4 1 and 0
resent|y there are two bas|c rates of VA1 |n Ind|a name|y 4 and 12S Apart from th|s there |s an
exempt category and a spec|a| rate of 1 for a few se|ected |tems In the exempt category |tems of
bas|c necess|t|es and goods of |oca| |mportance have been put up 1hese are rough|y 10 |tems Spec|a|
rate of 1 have been put up on Go|d s||ver and prec|ous stones 1here |s a|so a category w|th 20 per
cent f|oor rate of tax but the commod|t|es ||sted |n th|s schedu|e are not e||g|b|e for |nput tax
rebate]set off 1h|s category covers |tems ||ke motor sp|r|t (petro| d|ese| and av|at|on turb|ne fue|)
||quor etc

VAT registered
'A% registered means registered for VAT purposes, i.e. entered into an officiaI VAT
payers register of a country. Both naturaI persons and IegaI entities can be VAT
registered. Countries that use VAT have estabIished different threshoIds for
remuneration derived by naturaI persons/IegaI entities during a caIendar year (or a
different period), by exceeding which the VAT registration is compuIsory. NaturaI
persons/IegaI entities that are VAT registered are obIiged to caIcuIate VAT on certain
goods/services that they suppIy and pay VAT into a particuIar state budget. VAT
registered persons/entities are entitIed to a VAT deduction under IegisIative reguIations
of a particuIar country. The introduction of a VAT can reduce the cash economy because
businesses that wish to buy and seII with other VAT registered businesses must
themseIves be VAT registered.
VA1 vaIue added tax or vaIue-added tax (VAT) is a form of consumption tax. From the
perspective of the buyer, it is a tax on the purchase price. From that of the seIIer, it is a
tax onIy on the "vaIue added" to a product, materiaI or service, from an accounting point
of view, by this stage of its manufacture or distribution. The manufacturer remits to the
government the difference between these two amounts, and retains the rest for
themseIves to offset the taxes they had previousIy paid on the inputs.
The "vaIue added" to a product by a business is the saIe price charged to its customer,
minus the cost of materiaIs and other taxabIe inputs. A VAT is Iike a saIes tax in that
uItimateIy onIy the end consumer is taxed. It differs from the saIes tax in that, with the
Iatter, the tax is coIIected and remitted to the government onIy once, at the point of
purchase by the end consumer. With the VAT, coIIections, remittances to the
government, and credits for taxes aIready paid occur each time a business in the suppIy
chain purchases products.
Pupee 0evaIuatIon
SometImes there wouId be news that the Peserve ank of IndIa (PI) has decIded to
devaIue the Pupee. I wouId Interpret "devaIue" to mean that the vaIue of Pupee agaInst
other currencIes has been decreased. However, I aIso knew that the Pupee changes vaIue
everyday and not just those days when there was news from PI. I wouId feeI curIous as
to how then the Pupee kept changIng Its vaIue everyday.
In the good oId days, every country wouId specIfy Its currency In terms of CoId. However,
due to the probIems assocIated wIth thIs mechanIsm, especIaIIy durIng tImes of CoId
scarcIty - thIs system was scrapped.
What happens now Is that each country chooses what controI It wants to have over Its
currency. It can Iet the currency fIoat - whIch means that the market wIII determIne the
prIce based on demand, suppIy, baIance of trade etc. ThIs Is the Ieast IntrusIve method
and requIres IIttIe actIon from the country's centraI bank.
The other Is choIce the centraI bank can make Is to tIe the currency to a fIxed set of
other currencIes. ThIs IncIudes decIdIng upon a weIghted mean formuIa (based on the
currencIes In the set) to determIne the currency vaIue. AII that Is needed then, Is to fInd
out the vaIues of those currencIes on a daIIy basIs and caIcuIate the vaIue of our currency
usIng the formuIa. ThIs Iets the country controI Its export and Import prIces to some
extent. In such a case, the centraI bank needs to have the currency partIaIIy or fuIIy
convertIbIe - and carry out currency exchanges based on the determIned formuIa.
WhiIe depreciation is considered to heIp exports and make imports costIier, imports and
exports are affected by a number of factors Iike growth in worId trade, growth in demand
for our exports, domestic need for imports, government poIicies etc. However,
depreciation has to be viewed in reIation to issues Iike depreciation by competitors,
extent of overvaIuation of domestic currency, impact on internationaI debt and foreign
investment, extent of domestic infIation etc. In India, exports have performed weII during
2000-01 with a growth of 19.83% as against an export target of 18%. Export promotion
being a constant endeavour of the government, a number of steps have been taken to
enhance the export growth which incIude reduction in transaction cost through
decentraIisation, simpIification of procedures and various other measures as
enumerated in the Exim PoIicy. Steps have aIso been taken to promote exports through
muItiIateraI and biIateraI initiatives, identification of thrust sectors and focus regions.
SpeciaI Economic Zones are being set up to further boost the exports.
This was stated by Shri Digvijay Singh, Minister of State for Commerce and Industry, in a
written repIy in the Rajya Sabha on August 14.

When PI changes the formuIa, that Is caIIed devaIuatIon - aIthough the rates change daIIy
based on the formuIa.
DEVALUATION: 0eva|uat|on means off|c|a||y |ower|ng the va|ue of currency |n terms of fore|gn currenc|es. There
|s a d|fference between deva|uat|on and exchange deprec|at|on. 0eva|uat|on |s the resu|t of off|c|a| government
act|on. 0eprec|at|on or dec||ne |n the rate of exchange of one currency |n terms of another |s due to market forces.
8ubstant|a||y deva|uat|on and deprec|at|on both refer to the reduct|on of |nternat|ona| currency |n terms of fore|gn
currenc|es. when the rupee was de||nked from the do||ar and f|oated aga|nst a basket of currenc|es on Jan 8, 1982, the
rupee par|ty stood rupees 9.90 to a do||ar. The 8tate 8ank of Pak|stan s|nce then has deva|ued the rupee a number of
t|mes. The rupee spot buy|ng rate to do||ar as on 1..2000 stands at rupees 54.

FiscaI Deficit : When a government's totaI expenditures exceed the revenue that it generates
(excIuding money from borrowings). Deficit differs from debt, which is an accumuIation of yearIy

FiscaI measures : Measures empIoyed by governments to stabiIize the economy, specificaIIy by
adjusting the IeveIs and aIIocations of taxes and government expenditures. When the economy is
sIuggish, the government may cut taxes, Ieaving taxpayers with extra cash to spend and thereby
increasing IeveIs of consumption. An increase in pubIic-works spending may Iikewise pump cash
into the economy, having an expansionary effect. ConverseIy, a decrease in government spending
or an increase in taxes tends to cause the economy to contract. FiscaI poIicy is often used in
tandem with monetary poIicy. UntiI the 1930s, fiscaI poIicy aimed at maintaining a baIanced
budget; since then it has been used "countercycIicaIIy," as recommended by John Maynard
Keynes, to offset the cycIe of expansion and contraction in the economy. FiscaI poIicy is more
effective at stimuIating a fIagging economy than at cooIing an infIationary one, partIy because
spending cuts and tax increases are unpopuIar and partIy because of the work of economic
stabiIizers. See aIso business cycIe.
Iiscul meusores to contuin inIlution
PLNI: Government muy consider Iiscul meusores, iI reqoired, to euse pressore on
the prices oI non-Iood urticles, jost like it did Ior petrol und diesel. It is ulso
looking ut higher imports oI Iood prodocts soch us polses to tume inIlution.
InIlution Ior the week ended November 1S hus tooched u high oI g.qg%, murginully
short oI the ooterbund oI g-g.g% inIlution projected by the Reserve Bunk oI Indiu
Ior this Iiscul. It wus q.,% in the corresponding week lust yeur und g.q% the week
ended November 11. The government's tolerunce level oI inIlution is q%. "These
{price increuses in non-Iood urticles) cun ulwuys be uddressed by Iiscul steps," suid
Iinunce minister P Chidumburum. "Bot the reul issoe is u sopply side one und
inIlution is muinly driven by primury urticles, purticolurly polses und wheut," he
So, the only doruble unswer to contuin inIlution und to sostuin the continoed
growth momentom oI the Indiun economy is ucceleruting the domestic
ugricoltorul prodoction to keep puce with the growing consomer demund,
uccording to Chidumburum.
Meunwhile cluiming thut Indiu is riding un investment boom, which hus shown u
growth oI g,%, Chidumburum reiteruted thut this growth needs to be muintuined
Ior next q-g yeurs to sostuin economic growth oI S-q%. Also, Indiu shoold welcome
investments Irom uny soorce - privute, poblic or Ioreign, he suid.
Investments ure needed Ior inIrustroctore development, which shoold keep puce
with the economic growth or else
prodoctivity woold be uIIected us in the cuse oI Toticorin port, Chidumburum suid.
Moreover, muny Ioreign investors were willing to invest in Indiu us investments in
their coontries hud reuched sutorution. "They shoold be welcomed in this
coontry," he suid.

Swabhiman scheme for 5 cr famiIies soon: Pranab
Under the scheme subscribers would get Rs1,000 from the government each year for a subscription
amount of Rs12,000 per year
New Delhi: The government on Tuesday said its financial inclusion
programme 'Swabhiman, in which five crore households would be
provided access to banking services in unbanked areas, will be rolled out
At Economic Editors' Conference in New Delhi, finance minister Pranab
Mukherjee said, "Swabhiman - a nationwide programme on financial
inclusion, estimated to cover approximately five crore households, is now
ready for roll out."
He said the government has also launched 'Swavalamban, a pension
scheme for workers in the unorganised sector, who do not have access to
the social security net.
Under the scheme subscribers would get Rs,000 from the government
each year for a subscription amount of Rs2,000 per year. The scheme will
remain valid for this financial year and for the next three consecutive
"Government has targeted ten lakh workers from un- organized sectors
each during the initial four years of the implementation of Swavalamban
Scheme totalling to 40 lakh subscribers by March 204," Mukherjee added.
Pranab Mukherjee launches LIC's 'Swavalamban' Pension scheme

1he Scheme a|ms at cover|ng the Unorgan|zed Sector under th|s New ens|on System from age 60
FoIIowing his announcement in the Union Budget 2010, Union Finance
Minister SriPranab Mukherjee presented to the country " SwavaIamban", a Pension
Scheme for the unorganized Sector on 26th September,2010 at Raghunathganj under the
Jangipur Sub Division of Murshidabad District and distributed PRAN Cards to a few
beneficiaries. SwavaIamban Yojana is administered by Pension Fund ReguIatory and
DeveIopment Authority and LIC is the FaciIitator.
The Scheme aims at covering the Unorganized Sector under this New Pension System
from age 60 years. Members of Unorganized sector aged between 18 years to 55 years
shaII be incIuded under the scheme that provides for minimum monthIy
contribution Rs.100/- , minimum annuaI contribution Rs. 1000/- and maximum annuaI
contribution Rs.12,000/- per member.
Under the scheme Government contribution wiII be Rs. 1000/- per annum for financiaI
2010-11 and this scheme shaII be avaiIabIe for another three years.
In the presenting Ceremony Sri Namo Narain Meena Minister Of State, Sri R GopaIan
Secretary FinanciaI Services, Sri Rakesh Singh AdditionaI secretary FinanciaI Services
Government of India, Sri Yogesh AgarwaI Chairman PFRDA, T S Vijayan Chairman LIC,
Sri Thomas Mathew T Managing Director LIC, Smt Sunita Sharma Executive Director LIC
and Sri R R Dash ZonaI Manager, LIC Eastern Zone were aIso present. The dignitaries
incIuded honorabIe Members of ParIiament incIuding Sri Adhir Ranjan Chowdhury, Sri
Mannan Hossain and Sri MoinuI Hassan as weII as LegisIative AssembIy.
On the Launching date many Bidi Workers of the Murshidabad District and agents of
LIC enroIIed themseIves. Lot of enthusiasm was observed among the IocaI peopIe. LIC's
successfuI experience in extending benefits of sociaI security to the sociaI sector
in it being entrusted the job of faciIitating the scheme.

Finance Minister Pranab Mukherjee today introduced a high new tax sIab for senior
citizens of 80 years and above. UnveiIing the Budget proposaIs for 2011-12 in the Lok
Sabha, he aIso proposed to reduce the age Iimit for consideration as senior citizens from
65 years to 60 years.
Under the on-going Indira Gandhi NationaI OId Age Pension Scheme for BeIow Poverty
Line (BPL) beneficiaries, the eIigibiIity for pension wiII now be reduced to 60 years from
65 years at present.
He aIso announced that the pension amount is being raised from Rs 200 at present to Rs
500 per month for those who are 80 years and above.
Senior citizens wiII get tax exemption for income up to Rs 2.5 Iakh, higher from Rs 2.4
Iakh now.
New tax sIabs:
SIabs (Rs) Rate
upto 250000 0
250000-500000 10
500001-800000 20
800001 and 30

OId tax sIabs:

Soon, smaII taxpayers wiII have 'Sugam' I-T form

The Finance Ministry wiII soon unveiI the simpIer income-tax returns form 'Sugam', which
is aimed at reducing compIiance burden on smaII businessmen and professionaIs.
"Sugam is currentIy being examined by the Law Ministry and wiII be notified soon," a
Revenue Department officiaI said.
Finance Minister Pranab Mukherjee in his budget speech for 2011-12 had announced the
new simpIified return form 'Sugam' to reduce the compIiance burden of smaII taxpayers
who faII within the scope of presumptive taxation.
The officiaI said the new form is in Iine with the government's effort to make fiIing of
returns simpIer and user-friendIy.
The fiIing of return for individuaI saIaried peopIe has aIready been simpIified significantIy
with introduction of SARAL-II form. This has enabIed individuaIs to enter reIevant detaiIs
in a simpIe format in onIy two pages.
Presumptive taxation invoIves the use of indirect means to ascertain tax IiabiIity, which
differ from the usuaI ruIes based on the taxpayer's accounts.
Under India's presumptive taxation, person carrying on business wiII not be required to
get his accounts audited if the annuaI totaI saIes, turnover or gross receipts is Iess than
Rs 60 Iakh. The Iimit was increased by Mukherjee in 2010-11 budget from Rs 40 Iakh.
The presumptive tax Iimit in case of professionaIs was increased to Rs 15 Iakh from Rs
10 Iakh.
Name and Registered address of Credit Rating Agencies

CRISIL Limited
Website: www.crisiI.com
EmaiI: info@crisiI.com

Fitch Ratings India Private Ltd.
Website: www.fitchratings.com

3. ICRA Limited
Website: www.icra.in
EmaiI: info@icraindia.com
SIabs (Rs) Rate
0 - 240000 0
240001 - 500000 10
500001 - 800000 20
800001 and

Credit AnaIysis & Research Ltd. (CARE)
4th FIoor, Godrej CoIiseum
Somaiya HospitaI Road
Behind Everard Nagar
Off Eastern Express Highway, Sion (E)
Mumbai 400 022
TeI: + 91 (22) 566 02871-73
Fax: + 91 (22) 566 02876
Website: www.careratings.com
EmaiI: care@careratings.com
5. Brickwork Ratings India Private Limited
Website: www.brickworkratings.in
EmaiI: info@brickworkratings.com

6. SME Rating Agency of India Ltd. (SMERA)
Website: www.smera.in
EmaiI: info@smera.in


The Mid Day Meal is the world's largest school feeding programme
reaching out to about 2 crore children in over 2.6 lakh
schools/EGS centres across the country.
Mid Day Meal in schools has had a long history in India. In 92, a
Mid Day Meal Programme was introduced for disadvantaged
children in Madras Municipal Corporation. By the mid 980s three
States viz. Gujarat, Kerala and Tamil Nadu and the UT of
Pondicherry had universalized a cooked Mid Day Meal Programme
with their own resources for children studying at the primary stage
By 990-9 the number of States implementing the mid day meal
programme with their own resources on a universal or a large scale
had increased to twelve states.
With a view to enhancing enrollment, retention and attendance and
simultaneously improving nutritional levels among children, the
National Programme of Nutritional Support to Primary
Education (NP-NSPE) was launched as a Centrally Sponsored
Scheme on th August 99, initially in 2408 blocks in the country.
By the year 99-98 the NP-NSPE was introduced in all blocks of the
country. It was further extended in 2002 to cover not only children
in classes I -V of Government, Government aided and local body
schools, but also children studying in EGS and AIE centres. Central
Assistance under the scheme consisted of free supply of food grains
@ 00 grams per child per school day, and subsidy for
transportation of food grains up to a maximum of Rs 0 per quintal.

The Creen Revo|ut|on |n |nd|a |s a good examp|e of a p|anned deve|opment |n|t|at|ve that br|ngs out a|| the
essent|a| features of the deve|opment process. Unt|| 190 agr|cu|ture |n |nd|a d|d not d|ffer marked|y from
what |t had been dur|ng the co|on|a| per|od stretch|ng back 200 years ago. The Creen Revo|ut|on |s usua||y
descr|bed as the |ntroduct|on of hybr|d var|et|es of wheat and r|ce, but the adopt|on of hybr|ds a|one |s not
suff|c|ent to exp|a|n the phenomena| ach|evements of the Creen Revo|ut|on. 8uccess was made poss|b|e by
a comprehens|ve and we||-coord|nated program |nvo|v|ng mu|t|p|e changes |n the way soc|ety managed the
product|on of food.
Pr|or to the |aunch of the Creen Revo|ut|on, |nd|an agr|cu|ture was |arge|y based on subs|stence-|eve|
farm|ng wh|ch d|d not generate suff|c|ent product|on to meet the country's food requ|rements. |n the past
th|s had |ed to per|od|c food shortages and fam|nes wh|ch were managed by huge |mports from abroad.
Creen Revo|ut|on was an attempt to break out of th|s cond|t|on and |ncrease food product|on to make the
country se|f-suff|c|ent.
The |nd|an government rea||zed that |t needed to do many th|ngs to w|n the cooperat|on of the |nd|an farmers
|n order to make the green revo|ut|on successfu|. F|rst, farmer had to be conv|nced that acceptance of the
hybr|d var|et|es wou|d |ead to |ncreased y|e|ds. Then an assurance had to be g|ven that |ncreased
product|on wou|d not |ead to decreased pr|ces as common|y occurred |n the past dur|ng years of bumper
harvest. The government had to make arrangements to ensure supp|y of qua||ty seeds, fert|||zers and make
prov|s|on for adequate storage space. |t a|so had to tra|n a huge network of extens|on agents to |mpart the
necessary tra|n|ng to farmers so that they carry out the cu|t|vat|on correct|y.
The government accomp||shed a|| th|s by sett|ng up many new organ|zat|ons. |t set up Food 6orporat|on to
buy food gra|ns from surp|us product|on areas and d|str|bute |t |n areas aff||cted w|th shortage. |t const|tuted
an Agr|cu|tura| Pr|c|ng 6omm|ss|on to ensure a m|n|mum f|oor pr|ce to farmers so that there was no
d|s|ncent|ve for |ncreased product|on. 8eed and fert|||zer corporat|ons were formed to ensure supp|y of good
qua||ty seeds and t|me|y supp|y of fert|||zers etc. Agr|cu|tura| sc|ent|sts were mot|vated to do the|r work
better by the offer of better pay sca|es and greater |nfrastructura| fac|||t|es. 0n top of a|| th|s the government
estab||shed 100,000 demonstrat|on p|ots across the country to prove to the farmers that the hybr|d var|et|es
were |ndeed more product|ve. [1j
The Creen Revo|ut|on succeeded not on|y because |t was a p|anned |n|t|at|ve but a|so because |t was a
consc|ous and we||-conce|ved program. |t adopted the r|ght approaches and was a||ve to the needs and
asp|rat|ons of the farmers. Therefore |t was we|| rece|ved. The p|ann|ng and awareness exh|b|ted |n the
project he|ped create a h|gher |eve| organ|zat|on that cou|d harness the enthus|asm and energ|es of the
farmers more effect|ve|y.
P|anned deve|opment d|ffers from natura| deve|opment |n the sense that |t |s a program sponsored by the
government |n an attempt to acce|erate the deve|opment process that wou|d otherw|se take p|ace s|ow|y or
perhaps not occur at a||. The success of a p|anned |n|t|at|ve depends very much on |ts ab|||ty to ensure the
terms and cond|t|ons that he|p the natura| process succeed. Hany p|anned government |n|t|at|ves fa||
because they are begun w|thout the proper understand|ng of the cond|t|ons necessary for the|r fu|f|||ment.
0ur|ng the 190s on|y the Covernment of |nd|a had the resources necessary to |aunch a mass|ve program of
such d|mens|ons. ut today, |nd|a's pr|vate sector |s perhaps even better equ|pped than government to
br|ng about rap|d deve|opment as |||ustrated by the dramat|c expans|on of the country's |T |ndustry.
The Creen Revo|ut|on was so successfu| that |t enab|ed |nd|a to ach|eve food se|f-suff|c|ency w|th|n 5 years
and a doub||ng of food product|on w|th|n 10 years. Th|s was tota||y unexpected and took even the experts by
surpr|se. Hore than the |ncreased food product|on, the e|evat|on of agr|cu|tura| operat|on |n |nd|a to a h|gher
|eve| of organ|zat|on was a more noteworthy ach|evement. |t was a perfect demonstrat|on of the success that
a p|anned |n|t|at|ve cou|d ach|eve when |mp|emented w|th the requ|red know|edge and awareness.
A new scheme for creating rural electricity infrastructure and completing household electrification
named as ~Rajiv andhi rameen Vidyutikaran Yojana - Scheme of Rural Electricity
Infrastructure and Household Electrification was launched by Hon`ble Prime Minister Dr.
Manmohan Singh today in a nation-wide function. Smt. Sonia andhi, Chairperson, National
Advisory Council graced the occasion as uest of Honour. Shri P.M. Sayeed, Union Power Minister
presided over the function.
The Chief Ministers of 12 States (Assam, 1&K, 1harkhand, Madhya Pradesh, Orissa, Rajasthan,
Uttar Pradesh, Andhra Pradesh, Karnataka, Kerala, Maharashtra and West Bengal) and overnor
of Bihar participated in the programme through video-conferencing. Union Territory of
Lakshadweep was also on the national network during the programme.
The scheme has been launched to fulfill the commitment of the National Common Minimum
Programme (NCMP) of completing the household electrification in next 5 years and modernizing
the rural electricity infrastructure.
Since independence so far only about 44 rural households could be given access to electricity and
more than one lakh villages are still to be electrified. The new programme involves providing access
for electricity to 7.8 crore rural households in five years. Accomplishing this task in a period of 5
years is going to be an unprecedented event in our endeavour to develop India.
The scheme, to be implemented through Rural Electrification Corporation, will provide Ninety per
cent of the capital cost of the programme by the Central overnment as grant for creating:-

o Rural Electricity Distribution Backbone (REDB) with at least one 33/11 KV (or 66/11 KV)
substation in each block.

o Village Electrification Infrastructure (VEI) with at least one distribution transformer in each

o Decentralised Distributed eneration (DD) Systems where grid supply is not feasible or cost-

The scheme provides for free of cost connection to all rural households living below poverty line.
Further, there will no discrimination in the hours of supply between rural and urban areas.
The earlier focus of electrification in rural areas had been primarily for irrigation and it has been
done generally by extending the LT lines in a piecemeal manner resulting in unreliable and limited
hours of power supply. The new programme aims at a qualitative transformation of the rural
electricity infrastructure. It envisages that there will no discrimination between urban and rural
areas in respect of hours of supply. 24 hours supply of good quality power would also enable
dispersal of small industries, khadi and village industries in the rural areas. It will also facilitate
delivery of modern health care, education and application of information technologies. This is
aimed at accelerated rural development, employment generation and poverty alleviation.
The scheme also lays special emphasis on sustainability of rural supply through collection of the
cost of electricity from the beneficiaries. To achieve this objective, it is proposed that franchisees
like NOs, consumer associations etc. will be deployed with appropriate involvement of Panchayati
Raj institutions. The State overnments will be free to provide appropriate targetted subsidy to
poor households.
The Central overnment has also offered the project implementation and management expertise of
its Central Power Sector Undertakings like NTPC, NHPC, PCIL and DVC to the States who are
willing to make use of these services for ensuring timely completion of the project in this scheme.
The scheme has a target of electrifying 1,25,000 un-electrified villages and giving access to 7.8 crore
uncovered rural households in next 5 years. The Central overnment has already approved
Rs.5000 crore for providing capital subsidy for this scheme in the remaining period of 10
Year Plan. Total estimated cost of the scheme is Rs.16000 crore which will also continue during the
Plan period.

L|st of Maharatna Navratna and M|n|ratna Compan|es of Ind|a

List of Mohorotno Novrotno ond Minirotno cP5s
4s per ovoi/ob/e informotion
%os on 15
4pri/ 2011)
Maharatna CP5Es
Cna! IndIa LImItcd
IndIan OI! CnrpnratInn LImItcd
OI! & Natura! Gas CnrpnratInn LImItcd
5tcc! AuthnrIty nf IndIa LImItcd

Navratna CP5Es
Bharat E!cctrnnIcs LImItcd
Bharat Hcavy E!cctrIca! LImItcd
Bharat Pctrn!cum CnrpnratInn LImItcd
GAIL (IndIa) LImItcd
HIndustan AcrnnautIcs LImItcd
HIndustan Pctrn!cum CnrpnratInn LImItcd
Mahanagar Tc!cphnnc NIgam LImItcd
NatInna! A!umInIum Cnmpany LImItcd
Ncyvc!I LIgnItc CnrpnratInn LImItcd
OI! IndIa LImItcd
Pnwcr FInancc CnrpnratInn LImItcd
Pnwcr GrId CnrpnratInn nf IndIa LImItcd
RashtrIya Ispat NIgam LImItcd
Rura! E!cctrIfIcatInn CnrpnratInn LImItcd
5hIppIng CnrpnratInn nf IndIa LImItcd

MInIratna Catcgnry - I CP5Es

. A|rports Author|ty of Ind|a
2 8a|mer Lawr|e Co L|m|ted
3 8harat Dynam|cs L|m|ted
4 8LML L|m|ted
S 8harat Sanchar N|gam L|m|ted
6 8r|dge koof Company (Ind|a) L|m|ted
7 Centra| Warehous|ng Corporat|on
8 Centra| Coa|f|e|ds L|m|ted
9 Chenna| etro|eum Corporat|on L|m|ted
10 Coch|n Sh|pyard L|m|ted
11 Conta|ner Corporat|on of Ind|a L|m|ted
12 Dredg|ng Corporat|on of Ind|a L|m|ted
13 Lng|neers Ind|a L|m|ted
14 Lnnore ort L|m|ted
1S Garden keach Sh|pbu||ders Lng|neers L|m|ted
16 Goa Sh|pyard L|m|ted
17 n|ndustan Copper L|m|ted
18 nLL L|fecare L|m|ted
19 n|ndustan Newspr|nt L|m|ted
20 n|ndustan aper Corporat|on L|m|ted
21 nous|ng Urban Deve|opment Corporat|on L|m|ted
22 Ind|a 1our|sm Deve|opment Corporat|on L|m|ted
23 Ind|an ka||way Cater|ng 1our|sm Corporat|on L|m|ted
24 IkCCN Internat|ona| L|m|ted
2S kICCL L|m|ted
26 Mazagaon Dock L|m|ted
27 Mahanad| Coa|f|e|ds L|m|ted
28 Manganese Cre (Ind|a) L|m|ted
29 Manga|ore kef|nery etrochem|ca| L|m|ted
30 M|shra Dhatu N|gam L|m|ted
31 MM1C L|m|ted
32 MS1C L|m|ted
33 Nat|ona| Iert|||zers L|m|ted
34 Nat|ona| Seeds Corporat|on L|m|ted
3S NnC L|m|ted
36 Northern Coa|f|e|ds L|m|ted
37 Numa||garh kef|nery L|m|ted
38 awan nans ne||copters L|m|ted
39 kashtr|ya Chem|ca|s Iert|||zers L|m|ted
40 kI1LS L|m|ted
41 SIVN L|m|ted
42 Secur|ty r|nt|ng and M|nt|ng Corporat|on of Ind|a L|m|ted
43 South Lastern Coa|f|e|ds L|m|ted
44 State 1rad|ng Corporat|on of Ind|a L|m|ted
4S 1e|ecommun|cat|ons Consu|tants Ind|a L|m|ted
46 1nDC Ind|a L|m|ted
47 Western Coa|f|e|ds L|m|ted
48 WACCS L|m|ted

M|n|ratna CategoryII CSLs

49 8harat umps Compressors L|m|ted
S0 8roadcast Lng|neer|ng Consu|tants (I) L|m|ted
S1 Centra| M|ne |ann|ng Des|gn Inst|tute L|m|ted
S2 LdCIL (Ind|a) L|m|ted
S3 Lng|neer|ng ro[ects (Ind|a) L|m|ted
S4 Ierro Scrap N|gam L|m|ted
SS nM1 (Internat|ona|) L|m|ted
S6 nSCC (Ind|a) L|m|ted
S7 Ind|a 1rade romot|on Crgan|sat|on
S8 Ind|an Med|c|nes harmaceut|ca|s Corporat|on L|m|ted
S9 M L C C N L|m|ted
60 Nat|ona| I||m Deve|opment Corporat|on L|m|ted
61 Nat|ona| Sma|| Industr|es Corporat|on L|m|ted
62 L C L|m|ted
63 ka[asthan L|ectron|cs Instruments L|m|ted
Navratna was the titIe given originaIIy to nine PubIic Sector Enterprises (PSEs) identified
by the Government of India in 1997 as "pubIic sector companies that have comparative
advantages", giving them greater autonomy to compete in the gIobaI market so as to
"support [them] in their drive to become gIobaI giants".
The number of PSEs having
Navratna status has been raised to 16,
the most recent addition being OiI India Limited.
PSU companies are divided into three categories:
Miniratna CPSEs
Category I
Category II
Maharatna status
In 2009, the government estabIished the Maharatna status, which raises a company's
investment ceiIing from Rs. 1,000 crore to Rs. 5,000 crore.
The Maharatna firms can now
decide on investments of up to 15 per cent of their net worth in a project; the Navaratna
companies couId invest up to Rs 1,000 crore without expIicit government approvaI.
The six criteria for eIigibiIity as Maharatna are:
Having Navratna status.
Listed on Indian stock exchange with minimum prescribed pubIic sharehoIding under
SEBI reguIations.
An average annuaI turnover of more than Rs. 20,000.
crore during the Iast 3 years.
EarIier it was Rs 25,000 Crore.

An average annuaI net worth of more than Rs. 10,000
crore during the Iast 3 years.
EarIier it was Rs. 15,000 crore.

An average annuaI net profit after tax of more than Rs. 2500 crore during the Iast 3 years.
EarIier it was Rs. 5000 crore.

ShouId have significant gIobaI presence/internationaI operations.

Navratna status
Navratna was the titIe given originaIIy to nine PubIic Sector Enterprises (PSEs), identified
by the Government of India in 1997 as having comparative advantages, which aIIowed them
greater autonomy to compete in the gIobaI market.
The number of PSEs having
Navratna status has been raised to 16,
The government is IikeIy to accord the coveted
status to Engineers India Limited, which is under consideration.
Miniratna Status
In addition, the government created another category caIIed Miniratna. Miniratnas can
aIso enter into joint ventures, set subsidiary companies and overseas offices but with
certain conditions. In 2002, there were 61 government enterprises that were awarded
Miniratna status. However, at present, there are 66 government enterprises that were
awarded Miniratna status.
SmaII Industries DeveIopment Bank of India ([1]) is an independent financiaI
institution aimed to aid the growth and deveIopment of micro, smaII and medium-scaIe
enterprises in India. Set up on ApriI 2, 1990 through an act of parIiament, it was
incorporated initiaIIy as a whoIIy owned subsidiary of IndustriaI DeveIopment Bank of
India. Current sharehoIding is wideIy spread among various state-owned banks,
insurance companies and financiaI institutions. Beginning as a refinancing agency to
banks and state IeveI financiaI institutions for their credit to smaII industries, it has
expanded its activities, incIuding direct credit to the SME through 100 branches in aII
major industriaI cIusters in India. Besides, it has been pIaying the deveIopment roIe in
severaI ways such as support to micro-finance institutions for capacity buiIding and
onIending. RecentIy it has opened seven branches christened as Micro Finance
branches, aimed especiaIIy at dispensing Ioans up to Rs. 5.00 Iakh.
It is an apex body
[clarification needed]
and nodaI agency for formuIating, coordination and
monitoring the poIicies and programme for promotion and deveIopment of smaII scaIe
SIDBI has aIso fIoated severaI other entities for reIated activities. Credit Guarantee Fund
Trust for Micro and SmaII Enterprises ([2]) provides guarantees to banks for coIIateraI-
free Ioans extended to SME. SIDBI Venture CapitaI Ltd.([3]) is a venture capitaI company
focussed at SME. SME Rating Agency of India Ltd. (SMERA - [4]) provides composite ratings
to SME.
[edit]Provision Of Charter
SIDBI was estabIished on ApriI 2, 1990. The Charter estabIishing it, The SmaII Industries
DeveIopment Bank of India Act, 1989 envisaged SIDBI to be "the principaI financiaI
institution for the promotion, financing and deveIopment of industry in the smaII scaIe
sector and to co-ordinate the functions of the institutions engaged in the promotion and
financing or deveIoping industry in the smaII scaIe sector and for matters connected
therewith or incidentaI thereto.
SIDBI retained its position in the top 30 DeveIopment Banks of the WorId in the Iatest
ranking of The Banker, London. As per the May 2001 issue of The Banker, London, SIDBI
ranked 25th both in terms of CapitaI and Assets .
The Charter estabIishing it, The SmaII Industries DeveIopment Bank of India Act, 1989
envisaged SIDBI to be "the principaI financiaI institution for the promotion, financing and
deveIopment of industry in the smaII scaIe sector and to co-ordinate the functions of the
institutions engaged in the promotion and financing or deveIoping industry in the smaII
scaIe sector and for matters connected therewith or incidentaI thereto. Credit Guarantee
Fund Trust for Micro and SmaII Enterprises popuIarIy known as CGTMSE is wideIy being
used by many PSU Banks and Private sector banks to fund MSME sector.
[edit]Functions meant to heIp smaII scaIe industries
1. Refinances Ioans given to smaII scaIe sector by primary Iending institutions. 2.
Discounts and rediscounts biIIs reIating to the transaction of machinery of the smaII
scaIe sector. 3. Extends seed capitaI through specified agencies. 4. Assistance for export
of products of smaII-scaIe sector. 5. Provides services Iike Ieasing and factoring. 6. Give
financiaI support to purchase raw materiaI and the saIes of finished products.
SIDBI retained its position in the top 30 DeveIopment Banks of the WorId in the Iatest
ranking of The Banker, London. As per the May 2001 issue of The Banker, London, SIDBI
ranked 25th both in terms of CapitaI and Assets. Credit Guarantee Fund Trust for Micro
and SmaII Enterprises popuIarIy known as CGTMSE is wideIy being used by many PSU
Banks and Private sector banks to fund MSME sector.

[edit]RoIe in green finacing
There has been an increasing gIobaI concern about green and cIean environment and
SMEs have not been away from its purview. EnvironmentaI degradation caused due to
industriaIization has caught everyone's concern and it is reaIized that steps to protect
the environment have to be taken.
It's not onIy just the technoIogy used by SMEs that
has been in the focus, but there is aIso the change in production processes that needs to
be made to minimize the energy consumption. Lack of information about cIean
technoIogy and Iack of awareness about its advantages are the major reasons for SMEs
not being abIe to upgrade the technoIogy.
As the apex body for promoting finance and
deveIopment of SMEs, SIDBI has proactiveIy been working in the area of sustainabIe
deveIopment of SME sector. It has been invoIved in cIuster IeveI intervention for
modernization and technoIogy evoIution. It has aIso been acting as the key agency for
deveIoping government schemes in the area of technoIogy advancement for SMEs.
It has been invoIved in two major ways-

1. Financing for energy efficiency- SIDBI has taken severaI initiatives to promote Iending
for green and energy efficient technoIogies in MSME sector. SIDBI foIIows focused
Iending schemes for those who want to upgrade to green technoIogy. SIDBI has provided
Ioans under the JICAscheme to more than 2000 MSMEs with aggregate assistance of
more than Rs.800 crore for cIeaner production and energy saving. This has Iead to
estabIishment of eIectronic waste recycIing faciIity in E-Parisara Pvt. Ltd. In BangaIore.
The advantages from this project has heIped more than 100 MSMEs to become compIiant
with reguIatory requirements, reduction in waste treatment cost and reuse & recycIing of
treated materiaIs. Moreover, Environ Protection & Infrastructure Ltd. In Surat, Gujarat has
been assisted by SIDBI to set up Treatment Storage and DisposaI FaciIities (TSDF) to
heIp create a proper waste-disposaI method. Eco Green SoIution Systems (P) Ltd. has
been assisted for setting up of a Treatment Storage and DisposaI FaciIities (TSDF) faciIity
for toxic waste. SIDBI has aIso provided assistance to taxi-drivers in Mumbai to get new
Taxis without any coIIateraI security under CGTMSE coverage. A micro-finance
institution named Friends of Women's WorId Banking (FWWB) was aIso provided
assistance of Rs.10 crore for providing SoIar Lanterns of 2 watts each to various micro-
entrepreneurs. SIDBI has aIso signed an MOU with American India Foundation to provide
support to Iow-income groups under Rickshaw-Sangh Programme. Under this, with the
heIp of finance from SIDBI, BMC has been abIe to provide 500 rickshaws to poor peopIe
residing in and around Iucknow.
2. Further green growth with deveIopment support- SIDBI has entered into a
Memorandum of Understanding (MoU) with the Bureau for Energy Efficiency (BEE) for
creation of a sheIf of energy efficient technoIogies for 25 MSME cIusters. MuIti-activity-
muIti agency MSME Financing and DeveIopment Project (MSMEFDP) has aIso come out
with knowIedge series pubIication on energy efficiency in Fruit & VegetabIe Processing,
Ceramics, Foundry and Engineering cIusters to combat the probIem of information
Thus, cIearIy, SIDBI has been abIe to get internationaI best practices in Green Financing.
It has visibIy been an active change maker for the country focusing extensiveIy on the
miIIennium deveIopment goaIs.
ProposaI to create Rs 100 crore India Microfinance Equity Fund: Indian Budget
Microfinance Focus February 28, 2011: Presenting the Indian Union Budget for the year
2011-2012, Finance Minister, Pranab Mukherjee on Monday said that he proposed to
create in the course of the year 'India Microfinance Equity Fund' of Rs 100 crore with
He said, "Micro Finance Institutions (MFIs) had emerged as an important means of
financiaI incIusion. Creation of a dedicated fund for providing equity to smaIIer MFIs
wouId heIp them maintain growth and achieve scaIe and efficiency in operations."
rudent|a| Norms Cn Income
kecogn|t|on Asset C|ass|f|cat|on And
rov|s|on|ng Cn Advances
rudent|a| norms on |ncome recogn|t|on asset c|ass|f|cat|on and prov|s|on|ng (IkAC norms) perta|n|ng
to advances portfo||os of banks were |ntroduced for the f|rst t|me by keserve 8ank of Ind|a dur|ng
f|nanc|a| year199293 |e year ended 31stMarch 1993 |n ||ne w|th the |nternat|ona| pract|ces 1he
prudent|a| norms are formu|ated on the bas|s of ob[ect|ve cr|ter|a rather than on any sub[ect|ve
cons|derat|on 1h|s has brought |n un|form and cons|stent app||cat|on of the norms and greater
transparency |n pub||shed accounts of banks keserve 8ank of Ind|a has been |ssu|ng Master C|rcu|ars
on prudent|a| norms for past few years Last Master c|rcu|ar on prudent|a| norms perta|n|ng to
advances was |ssued by keserve 8ank of Ind|a on 1st Iu|y 200S
Asset 1ype
Standard Asset 1he account |s not nonperform|ng and does not carry more than norma| r|sk attached
to the bus|ness
Nonerform|ng Asset
(NA) An asset becomes NA when |t ceases to generate |ncome zor the bank 1h|s wou|d mean
that |nterest wh|ch |s deb|ted to borrower's account has to be rea||zed by the bank An account has
to be c|ass|f|ed as NA on the bas|s of record of recovery rather than secur|ty charged |n favor of the
bank |n respect of such account 1hus an account of a borrower may become NA |f |nterest
charged to that part|cu|ar borrower |s not rea||sed desp|te the account be|ng fu||y secured
Ident|f|cat|on Cf Account As NpA
k8I has |a|d down var|ous cr|ter|a for c|ass|f|cat|on of var|ous types of advances as NA wh|ch are as
@erm Loon Interest and ]or |nsta|ment of pr|nc|pa| rema|n overdue for a per|od of more than 90 days
Cne w||| have to determ|net he due date of |nterest and |nsta|ment If e|ther |nterest or |nsta|ment |s
overdue zor more than 90 days then the account wou|d become NA Interestor |nsta|ment wh|ch |s due
as on 30th December wou|d be overdue for more than 90 days as on 31st March 2006 and the account
wou|d become NA nowever |f the same was due on 31st December 200S then the account wou|d not
become NA as on 31st March 2006
Overdroft/cosh credit If an account rema|ns out of order |t wou|d become NA Ior th|s purpose an
account wou|d be treated as 'out of order' |f
|)1he outstand|ng ba|ance rema|ns cont|nuous|y |n excess of the sanct|oned ||m|t]draw|ng power
zor90 days or more or
||)Lven |f the outstand|ng |n the account |s |ess than the sanct|oned ||m|t]draw|ng power there are no
cred|ts |n the account cont|nuous|y for 90 days as on the date of the 8a|ance sheet or
|||)Cred|ts |n the account are not suff|c|ent to cover |nterest deb|ted dur|ng the same per|od
1hus as on 31st March2006 |f any of the above cr|ter|a |s sat|sf|ed the account wou|d be c|ass|f|ed as
NA 1here may be a s|tuat|on where say zor examp|e draw|ng power of an account |s ks10 |acs
ba|ance |s ks8 |acs and there are no cred|ts |n the account zor 90days Such account wou|d be c|ass|f|ed
as NA

In banking, NPA are loans given to doubtful customers who
may or may not repay the loan on time. There are two types
of assets viz.,performing and non-performing. Performing
loans are standard loans on which both the principle and
interest are secured and their return is guaranteed.

Sovereign weaIth fund
A sovereign weaIth fund (SWF) is a state-owned investment fund composed
of financiaI assets such as stocks, bonds, property, precious metaIs or other financiaI
instruments. Sovereign weaIth funds invest gIobaIIy. Some of them have grabbed
attention making bad investments in severaI WaII Street financiaI firms
incIuding Citigroup, Morgan StanIey, and MerriII Lynch. These firms needed a cash
infusion due to Iosses resuIting from mismanagement and the subprime mortgage crisis.
Most SWFs are funded by foreign exchange assets.

Some sovereign weaIth funds may be heId by a centraI bank, which accumuIates the
funds in the course of its management of a nation's banking system; this type of fund is
usuaIIy of major economic and fiscaI importance. Other sovereign weaIth funds are
simpIy the state savings which are invested by various entities for the purposes of
investment return, and which may not have a significant roIe in fiscaI management.
The accumuIated funds may have their origin in, or may represent
foreign currency deposits, goId, SpeciaI Drawing Rights (SDRs) and InternationaI
Monetary Fund (IMF) reserve positions heId by centraI banks and monetary authorities,
aIong with other nationaI assets such as pension investments, oiI funds, or other
industriaI and financiaI hoIdings. These are assets of the sovereign nations which are
typicaIIy heId in domestic and different reserve currencies such as
the doIIar, euro and yen. Such investment management entities may be set up as officiaI
investment companies, state pension funds, or sovereign oiI funds, among others.
There have been attempts to distinguish funds heId by sovereign entities from foreign
exchange reserves heId by centraI banks. Sovereign weaIth funds can be characterized
as maximizing long term return, with foreign exchange reserves serving short
term currency stabilization and Iiquidity management. Many centraI banks in recent years
possess reserves massiveIy in excess of needs for Iiquidity or foreign exchange
management. Moreover it is wideIy beIieved most have diversified hugeIy into assets
other than short term, highIy Iiquid monetary ones, though aImost no data is pubIicIy
avaiIabIe to back up this assertion. Some centraI banks have even begun buying
equities, or derivatives of differing iIk (even if fairIy safe ones, Iike overnight interest rate
Haryana to Iaunch Wheat Based Nutrition Programme
Chandigarh, JuI 14 : The Haryana government has decided to purchase wheat and rice at
subsidised rates from Food Corporation of India (FCI) under Wheat Based Nutrition
Programme so that nutritious and quaIitative diet couId be served to the chiIdren.
These foodgrains wouId be suppIied in the Anganwari Centres (AWCs) in the state
through Confed and Hafed, said Women and ChiId DeveIopment Minister Geeta BhukkaI
after presiding over a meeting of the state IeveI coordination committee on Integrated
ChiId DeveIopment Scheme (ICDS) here today.

Ms BhukkaI said the Haryana government had decided to construct 8,255 Anganwari
Centres (AWCs) during the current financiaI year at a cost of Rs 57 crore. Besides, the
government wouId purchase attractive tabIe and chairs at a cost of Rs seven crore for
6500 AWCs in the state.

She aIso suggested that big mirrors shouId be hanged in the Anganwari Centres on the
pattern of Gujarat and TamiI Nadu so that chiIdren couId judge themseIves by Iooking
their face and dress in the mirror.

Ms BhukkaI said efforts wouId be made to set up aII Anganwari centers in schooIs to
improve the enroIment of chiIdren in the primary schooIs. She said the kitchen sheds
being set up under Mid-Day MeaI Scheme wouId be utiIised by the AWCs properIy.
Haryana Urban DeveIopment Authorities had been directed to make a provision in the
map for additionaI AWC whiIe constructing primary schooIs in the urban areas by HUDA.

Ms BhukkaI said HUDA authorities had aIso been directed to identify the schooI sites
where these AWCs couId be set up.

She aIso directed the LocaI Bodies Department that guideIines might be issued for
providing sites on concessionaI rate for construction of Anganwari buiIdings within the
municipaI periphery.

She suggested that MahiIa ChaupaIs which were being constructed in the state couId be
used for setting up AWCs.

Goods and Services Tax (India)
The Goods and Services Tax (GST) is a vaIue added tax to be impIemented in India [1] by
ApriI 2012.[2] It wiII repIace aII indirect taxes Ievied on goods and services by the Indian
CentraI and State governments. It is aimed at being comprehensive for most goods and
services with few tax exemption.
India is a federaI repubIic, and the GST wiII thus be impIemented concurrentIy by the
centraI and state governments as the CentraI GST and the State GST
respectiveIy.[3] Exports wiII be zero-rated and imports wiII be Ievied the same taxes as
domestic goods and services adhering to the destination principIe.
115th ConstitutionaI Amendment BiII, 2011 ("BiII") was put before the ParIiament by the
Finance Minister on 22 March 2011. In its current state, the Constitution of India does not
provide concurrent powers of taxation to the Union and the States. The BiII proposes to
amend the Constitution to empower the Union and States to frame Iaws for Ievying
goods and service tax ("GST") on transactions invoIving the suppIy of goods and
services. The BiII is thus a cruciaI step by the United Progressive AIIiance Government to
ensure introduction of the GST regime by 2012 in India.
If this is considered to be a major improvement over the pre-existing centraI excise
duty at the nationaI IeveI and the saIes tax system at the state IeveI, the new tax wiII be a
further significant breakthrough and the next IogicaI step towards a comprehensive
indirect tax reform in the country.
Keeping this overaII objective in view, an announcement was made by Shri PaIaniappan
Chidambaram, the Union Finance Minister, during the centraI budget of 2007-2008 that it
wouId be introduced from ApriI 1, 2010 and that the Empowered Committee of State
Finance Ministers, on his request, wouId work with the CentraI Government to prepare a
road map for introduction of GST in India.
After this announcement, the Empowered Committee of State Finance Ministers decided
to set up a Joint Working Group on May 10, 2007, with the Adviser to the Union Finance
Minister and the Member-Secretary of Empowered Committee as co-convenors and the
concerned Joint Secretaries of the Department of Revenue of Union Finance Ministry and
aII Finance Secretaries of the states as its members. The Joint Working Group, after
intensive internaI discussions as weII as interaction with experts and representatives of
Chambers of Commerce and Industry, submitted its report to the Empowered Committee
on November 19, 2007.
This report was then discussed in detaiI in the meeting of Empowered Committee on
November 28, 2007. On the basis of this discussion and the written observations of the
states, certain modifications were made, and a finaI version of the views of Empowered
Committee at that stage was prepared and was sent to the Government of India (ApriI 30,
2008). The comments of the Government of India were received on December 12, 2008
and were duIy considered by the Empowered Committee (December 16, 2008).
It was decided that a committee of PrincipaI Secretaries of the states wouId be set up to
consider these comments and submit their views. These views were submitted and were
accepted in principIe by the Empowered Committee on January 21, 2009. A working
group, consisting of the concerned officiaIs of the State Governments was then formed
and submitted their recommendations in detaiI on the structure of the GST in cIose
association with senior representatives of the Government of India.
An important interaction has aIso recentIy taken pIace between Shri Pranab Mukherjee,
the Union Finance Minister, and the Empowered Committee (October 19, 2009) on the
reIated issue of compensation for Ioss of the states. The Empowered Committee took a
detaiIed view on the recommendations of the Working Group of officiaIs and other
reIated matters. This detaiIed view of the Empowered Committee on the structure of GST
is now presented in terms of the First Discussion Paper, aIong with an Annexure on
FrequentIy Asked Questions and Answers on GST, for discussions with industry, trade,
agricuIture and peopIe at Iarge.
The discussion paper is divided into four sections. Since GST wouId be further
improvement over the VAT, Section 1 begins with a brief reference to the process of
introduction of VAT at the Centre and the States and aIso indicates the precise points
where there is a need for further improvement. This section aIso shows how the GST can
bring about this improvement. Section 2 then describes the process of preparation for
GST. FinaIIy, Section 3 detaiIs the comprehensive structure of the GST modeI.
No taxing system can compIeteIy eradicate the effect of cascading, but impIementation
of GST, to a Iarge extent, wiII minimize the effect. GST wiII provide a simpIe structure to
Ievy, coIIect and administer the taxes in the Country.
"WorId over, GST rates are typicaIIy between 16 per cent and 20 per cent. In India, it is
IikeIy to be the same," CBEC Chairman Sumit D Majumdar said. The tax-rate under the
proposed GST wouId come down, but the number of assesses wouId increase by 5-6
times. AIthough rates wouId come down, tax coIIection wouId go up due to increased
buoyancy.[4] The government is working on a speciaI IT pIatform for smooth
impIementation of the proposed Goods and Services Tax (GST). The IT speciaI purpose
vehicIe (SPV) christened as GST N (Network) wiII be owned by three stakehoIders-the
centre, the states and the technoIogy partner NSDL, CentraI Board of Excise and
Customs (CBEC) Chairman S Dutt Majumder said whiIe addressing a "NationaI
Conference on GST". On the possibiIity of roIIing out GST, he said, "There was no need
for aIarm if GST was not roIIed out in ApriI 1, 2012." The introduction of GST regime has
been pending for four years due to differences between the centre and some states over
the structure of the new tax regime.[5]
GST eIsewhere: More than 140 countries have introduced GST in some form. It has been
a part of the tax Iandscape in Europe for the past 50 years and is fast becoming the
preferred form of indirect tax in the Asia Pacific region. It is interesting to note that there
are over 40 modeIs of GST currentIy in force, each with its own pecuIiarities. WhiIe
countries such as Singapore and New ZeaIand tax virtuaIIy everything at a singIe rate,
Indonesia has five positive rates, a zero rate and over 30 categories of exemptions. In
China, GST appIies onIy to goods and the provision of repairs, repIacement and
processing services. It is onIy recoverabIe on goods used in the production process, and
GST on fixed assets is not recoverabIe. There is a separate business tax in the form of
VAT. For exampIe, when the GST was introduced in New ZeaIand in 1987, it yieIded
revenues that were 45 per cent higher than anticipated, in Iarge part due to improved
compIiance. It is more neutraI and efficient structure couId yieId significant dividends to
the economy in increased output and productivity. The GST in Canada repIaced the
federaI manufacturers' saIes tax which was then Ievied at the rate of 13 per cent and was
simiIar in design and structure as the CENVAT in India. It is estimated that this
repIacement resuIted in an increase in potentiaI GDP by 1.4 per cent, consisting of 0.9
per cent increase in nationaI income from higher factor productivity and 0.5 per cent
increase from a Iarger capitaI stock (due to eIimination of tax cascading). The Canadian
experience is suggestive of the potentiaI benefits to the Indian economy. This means
gains of about US$ 15 biIIion annuaIIy. Discounting these fIows at a modest 3 per cent
per annum, the present vaIue of the GST works out to about haIf a triIIion doIIars. This is
indeed a staggering sum and suggests the need for energetic action to usher the GST
regime at an earIy date. GST rates of some countries are given beIow. Country Rate of
GST AustraIia 10% Canada 5% Germany 19% Japan 5% Singapore 7% Sweden 25% UK
17.5%(20% w.e.f. 4 Jan 2011)
Renewed GST concerns
With heterogeneous State Iaws on VAT, the debate on the necessity for a GST has been
reignited. The best GST systems across the worId use a singIe GST whiIe India has opted
for a duaI-GST modeI. Critics cIaim that CGST, SGST and IGST are nothing but new
names for CentraI Excise/Service Tax, VAT and CST and hence GST brings nothing new
to the tabIe. The concept of vaIue-add has never been utiIised in the Ievy of service as
the DeIhi High Court is attempting to prove in the case of Home SoIution RetaiI whiIe
under CentraI Excise the focus is on defining and refining the definition of manufacture
instead of focusing on vaIue additions. The Revenue can be very stubborn when it
comes to refunds as the Maharashtra Government proves and software entities that
appIied for refunds on excess service tax paid on inputs discovered.
The aII-new Cenvat Credit RuIes, 2011 do IittIe to cIarify eIigibiIity for input credits by
using generaI terms such as " any goods which have no reIationship whatsoever with the
manufacture of a finaI product" and " services used primariIy for personaI use or
consumption of any empIoyee". Before penning the GST Act and RuIes, the Empowered
Committee wouId do weII to take a hard Iook at aII the present Iaws that GST subsumes
and their compIexities. It couId tempt them to rethink on the necessity to draft even the
preambIe [6]
This change in the tax structure is going to have a huge impact in the currentIy suppIy
chain of india. It is currentIy in sub-optimaI and has been structured in such a fashion to
avoid taxes. The suppIy chain tax structure of India can be broadIy cIassified in the
foIIowing categories.
LocaI saIes tax period (Maximize CST movement)
1. The system based on the efficiency of tax and not on Iogistics efficiency 2. Ware
houses pIaces at borders to serve markets in other states 3. Good sent in a roundabout
matter increasing Iogistics cost but saving IocaI taxes 4. The figure shows the process
pictoriaI. It makes the process compIex to overcome the IocaI taxes which used to be
very high and CST was Iess.
VaIue added tax period (VAT)
1. The main aim was to save the interstate saIes tax, CST which was no recoverabIe. 2.
VAT can be set-off, CST cannot be 3. This Iead to the increase in the number of
warehouses 4. AImost every state where you are seIIing must have a warehouse. 5. Due
to this their size reduced 6. This Iead to higher movement of goods Ieading to an
offsetting of the gains. 7. Reduced the usage of Iarge hubs and higher hauIage trucks 8.
Demand variabiIity increased due to the Iarge number of hubs 9. This Iead to Iocking-up
of high capitaI in inventory 10. The hoIding cost increased due increase in number of
The generaI mechanism in which the materiaI was being transferred in different states is
shown pictoriaIIy beIow. This gives a cIear indication that inter-state saIes were avoided
to save the CST. Finished goods are sent to godown/warehouse/depots in the state in
which the finished good has to be soId. This has Ied to creation of a Iot of smaII depots
which are not operationaIIy efficient.
The advent of GST
GST wiII bring about a change on the tax firmament by redistributing the burden of
taxation equitabIy between manufacturing and services. It wiII Iower the tax rate by
broadening the tax base and minimising exemptions. It wiII reduce distortions by
compIeteIy switching to the destination principIe. It wiII foster a common market across
the country and reduce compIiance costs. It wiII faciIitate investment decisions being
made on pureIy economic concerns, independent of tax considerations. It wiII promote
exports. GST wiII aIso promote empIoyment. Most importantIy, it wiII spur growth. The
chart beIow pictoriaIIy represents the movement of goods after GST.
1. Taxes which cannot be set off wiII reduce 2. AII India tax wiII be based on vaIue added
3. No vaIue added impIies no tax to be paid to the government 4. Creation of a tax neutraI
suppIy chain. 5. You foIIow any route; the tax given to the government wiII remain the
same. 6. Entry tax, Octroi etc. WiII be there, but as is evident, these are aIso being sIowIy
removed. This wiII make the suppIy chain perfectIy neutraI to taxes 7. Efficiency of SCM
wiII depend on the cost minimization of the foIIowing costs.
a. Logistics cost b. Carrying and forwarding agency costs c. Ware house fixed and
variabIe costs d. Depot fixed and variabIe costs
8. The seIection shouId be based on the foIIowing trades off which must be taken into
consideration whiIe designing the suppIy chain.
a. Meshed design Vs Hub and spoke Vs combination b. Ware house capacity and depot
capacity c. No of ware houses and no of depots d. Mode of transport on road(9 ton Vs 15
ton Vs 20 ton) and raiI ( HaIf rake, fuII rake, 2point rake) e. RepIacement cycIe f. Safety
stock g. MiIk runs