IMPORTANT TOPICS FOR TODAY
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BY SUMIT BHARDWAJ
31 August 2019
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1.10 public sector banks to be merged into four
(GS-3)
Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and United Bank of India to be merged; Indian Bank and Allahabad Bank to be merged
Finance Minister Nirmala Sitharaman today announced a big consolidation of public sector banks: 10 public sector banks to be merged into four. Under the scheme of amalgamation, Indian Bank will be merged with Allahabad Bank (anchor bank - Indian Bank); PNB, OBC and United Bank to be merged (PNB will be the anchor bank); Union Bank of India, Andhra Bank and Corporation Bank to be merged (anchor bank - Union Bank of India); and Canara Bank and Syndicate Bank to be merged (anchor bank - Canara Bank). In place of 27 public sector banks in 2017, now there will be 12 public sector banks after the latest round of consolidation of PSU banks. The consolidation of public sector banks will give them scale, the finance minister said.
What Is a Current Account Savings Account (CASA)?
A current account savings account (CASA) is aimed at combining the features of savings and checking accounts to entice customers to keep their money in the bank. It pays very low or no interest on the current account and an above-average return on the savings portion. CASA is most commonly used in West and Southeast Asia, though the CASA structure is available globally.
A CASA account pays no interest—or, in some cases, low interest—on the current account and an above-average return on the savings portion.
The CASA is a nonterm deposit, meaning it is used for the everyday banking and savings needs of the consumer. This type of account does not have a specific maturity or expiration date, so it is valid for as long as the account holder needs it to remain open. This is in contrast to a term deposit, which is open for a certain period of time. After the maturity date, the bank or institution pays a certain amount of interest on the principal balance.
How Current Account Savings Accounts (CASA) Work
A CASA operates like a normal bank account in which funds may be utilized at any time. It combines both the checking and savings functions into one. Because of this flexibility, a CASA has a lower interest rate than a term deposit, in which money is set aside to be untouched for a specific time period with a guaranteed interest rate.
Most banks offer CASAs to their customers for free. In some cases, there may be a small fee, depending on certain minimum or average balance requirements. These types of accounts attempt to limit the disintermediation that occurs when bank deposit interest is lower than other available short-term investments. A CASA tends to be a cheaper way for a bank to raise money than issuing term deposits, such as certificates of deposit (CDs), which offer higher interest rates to the customers.
Financial institutions encourage the use of a CASA because it generates a higher profit margin. Because the interest paid on the CASA deposit is lower than on a term deposit, the bank’s net interest income (NII) is higher. Thus, CASAs can be a cheaper source of funding for banks.
Demand deposits like CASAs let customers exchange a higher rate of interest for higher liquidity by giving them immediate access to their funds. However, because of the uncertainty relating to when a depositor will withdraw funds, CASA funds should not be utilized by a bank for long-term financing.
KEY TAKEAWAYS
Current Account Savings Accounts (CASA) are a type of non-term deposit account.
A CASA has a lower interest rate than term deposits, such as a certificate of deposit, and is therefore a cheaper source of funds for the financial institution.
A CASA combines the benefits of both a checking account and savings account, and it is indicative of a competitive market in which banks need to offer new products to win over customers.
Current Account vs. Savings Account
As noted above, the current account portion of the CASA does not earn any interest. There are generally no limits on deposits or withdrawals. The savings account portion does not have any restrictions on the number of deposits an account holder can make. However, it typically has restrictions on the number of withdrawals a person can make. This is put in place in order to encourage account holders to save. The maximum number of withdrawals permitted varies by institution.
Current Account Savings Account Ratio
The percentage of total bank deposits that are in a CASA is an important metric to determine the profitability of a bank. The CASA ratio indicates how much of a bank’s total deposits are in both current and savings accounts. The ratio can be calculated using the following formula:
CASA Ratio = CASA Deposits ÷ Total Deposits
A higher ratio means a larger portion of a bank’s deposits are in current and savings accounts, rather than term deposit accounts. This is beneficial to a bank because it gets money at a lower cost. Therefore, the CASA ratio is an indicator of the expense to raise funds and, therefore, is a reflection of a bank’s profitability or likelihood of generating profit.
Special Considerations
The existence of the CASA can be seen as a product of especially competitive or saturated markets, in which financial service companies have to create a steady stream of new products and features that differentiate them among different providers. As it stands, very few people agree that any market has one best bank. Globally, a large share of individuals believe all banks and financial institutions are roughly the same.
2.GDP growth down to 6-year low in Q1 of 2019-20 financial year(GS-3)
The last time the GDP grew slower was in the fourth quarter (January to March) of the financial year 2012-13, according to data with the Ministry of Statistics.
It grew at 8% in the first quarter of last year. The growth of Gross Value Added (GVA) stood at 4.9% in the first quarter of the financial year 2019-20, also the slowest in six years.
The plight of the real estate sector was also highlighted by the slowdown in its growth rate to 5.7% in the first quarter of this financial year, compared with 9.6% in the same quarter of 2018-19.
UNDERSTANDING GDP:
Definition: GDP or Gross Domestic Product is the money value of all the goods and services produced within the domestic territory of a country in an accounting year.
Let’s take the case of your village or town as an example.
People in the village earn money through various means. No one gives anybody free lunch! In order to earn money one has to provide something that has VALUE in terms of money. It can be goods such as milk, roti served in a hotel or a service such as teaching children, providing manual labour for building a house etc.
Thus the GDP of the village is total money value of milk sold+ total money value of rotis sold + total money value of manual labour provided(wages he earned)+total money value of teaching service provided (salary she earned). The same thing expanded for a country gives you the GDP of the country.
Accounting Year or Financial Year runs from April to March.
GDP PER CAPITA: It’s the average contribution of a citizen to a country’s GDP.
GDP Per Capita = National Income ÷ Population.
INDIA’s GDP: 1.877 trillion USD (2013)
USA GDP: 16.77 trillion USD (2013)
Neither GDP nor GNP is considered a good measure of economic development. HDI or Human Development Index is often selected as a good measure of economic development.
3.Collegium names judges for 4 Supreme Court vacancies
(GS-2) CONTEXT:Suggestions made for appointment of Chief Justices in 8 High Courts
The Supreme Court Collegium led by Chief Justice of India Ranjan Gogoi has made a slew of recommendations to fill four vacancies in the Supreme Court and for appointments of Chief Justices in eight High Courts across the country
.
On Friday the Supreme Court published its resolutions recommending Chief Justices of Punjab and Haryana, Rajasthan, Himachal Pradesh and Kerala High Courts – Justices Krishna Murari, S. Ravindra Bhat, V. Ramasubramanian and Hrishikesh Roy — for appointment to the Supreme Court.
The Supreme Court Collegium :
The Collegium System is a system under which appointments/elevation of judges/lawyers to Supreme Court and transfers of judges of High Courts and Apex Court are decided by a forum of the Chief Justice of India and the four senior-most judges of the Supreme Court.’ There is no mention of the Collegium either in the original Constitution of India or in successive amendments.
The recommendations of the Collegium are binding on the Central Government; if the Collegium sends the names of the judges/lawyers to the government for the second time.
How Collegium System Works?
The Collegium sends the recommendations of the names of lawyers or judges to the Central Government. Similarly, the Central Government also sends some of its proposed names to the Collegium. The Central Government does the fact checking and investigate the names and resends the file to the Collegium.
Collegium considers the names or suggestions made by the Central Government and resends the file to the government for final approval. If the Collegium resends the same name again then the government has to give its assent to the names. But time limit is not fixed to reply. This is the reason that appointment of judges takes a long time.
4.HP govt introduces Bill against forced religious conversion in assembly(GS-2)
The proposed Bill prohibits conversion by misrepresentation, force, undue influence, coercion, inducement, marriage or any fraudulent means. The Bill makes a one-month prior declaration mandatory for conversion
.
Anybody abetting or conspiring such conversion will face imprisonment from a year to five years. If Dalits, women or minors are forced to convert, the jail term will be between two and seven years.
Section 7 of the Bill states that a person wanting to convert will give a declaration on a prescribed pro forma for at least one month in advance to the district magistrate, stating that he is converting on his own.
The Himachal Pradesh Freedom of Religion Bill, 2019 prohibits religious conversions by acts like misrepresentation, undue influence, coercion, marriage or any other fraudulent means. Section 5 of the bill will declare null and void, any marriage which has been carried out for the sole purpose of conversion.
Further, anyone who seeks to convert will have to notify the district magistrate (DM) a month in advance, stating that the individual is converting on his own. The priest carrying out the conversion, too, will have to do the same thing. However, this is not applicable to those reconverting to their original religion.
Those converting Dalits, women or minors will face a jail term of between two-seven years. Also, according to Section 10 of the bill, those violating its provisions will not be allowed to accept any donation from within or outside the country.
5.West Bengal passes Bill against lynching
(GS-2)
The legislation, which has provision for the death sentence, says “nodal officers” will be appointed to “monitor and coordinate prevention of lynching”. It proposes a jail term from three years to life for those involved in assaulting and injuring a person. The Bill, while defining terms such as “lynching” and “mob”, says the West Bengal Lynching Compensation Scheme may be framed under this Act.
KEY FACTS RELATED TO THE BILL:
constitutional rights of those who are vulnerable are protected and acts of lynching are punished."
In case of a lynching that leads to death, the accused can be punished with rigorous life imprisonment and a fine of up to Rs 5 lakh, officials said. The bill, officials added, would see the State Director-General of Police appointing a coordinator to act as a nodal officer to monitor and take measures to prevent incidents of lynching.
The Bill also asks for a fine of up to Rs 50,000 to be imposed for “publishing, communicating or disseminating offensive material by any method – physical or electronic” and a maximum of three years and fine up to Rs 1 lakh for those who create “a hostile environment for a person or a group of persons."
As per the Bill, the state will provide protection to victims, who can also choose any advocate from the legal aid panel under the Legal Services Authorities Act 1987. The state will also provide free medical treatment and compensation as per the Compensation Scheme, The Indian Express reported.
Earlier on August 5, the Rajasthan Assembly passed a Bill on providing life imprisonment and a fine from Rs 1 lakh to Rs 5 lakh to those convicted of mob lynching. 6.India, Pak. to join SAARC event in U.S.(GS-1,2)
India and Pakistan are expected to participate in the Foreign Minister-level meeting of the South Asian Association for Regional Cooperation (SAARC) in New York on September 26, a diplomatic source has confirmed. The meeting has remained on track despite the state of tension between the two countries. South Asian Association for Regional Cooperation (SAARC)
The idea of regional cooperation in South Asia was first mooted in May 1980. The Foreign Secretaries of the seven countries met for the first time in Colombo in April 1981. The Committee of the Whole, which met in Colombo in August 1981, identified five broad areas for regional cooperation. New areas of cooperation were added in the following years. The South Asian Association for Regional Cooperation was set up when its Charter was formally adopted on 8 December 1985 by the Heads of State or Government of India, Bangladesh, Maldives, Bhutan, Nepal, Sri Lanka and Pakistan. The organisation offers an arena for the peoples of South Asia to work with one another in a spirit of friendship, trust and understanding. Its objective is to advance the welfare of the people of the region, to enhance the quality of life via faster economic growth, cultural development and social progress. In SAARC, cooperation is based on respect for the principles of sovereign equality, political independence, territorial integrity, mutual benefit and non-interference in the internal affairs of the member states. Regional cooperation is seen as a complement to the bilateral and multilateral relations of SAARC Member States.
Decisions are taken on the basis of unanimity. Disputable and bilateral issues are not taken up for discussions in SAARC. Before the first summit was held at Dhaka, Bangladesh, preparatory meetings were conducted. In 1981, Colombo, the foreign secretaries of the nations met. The foreign ministers met in New Delhi in 1983 and identified areas for cooperation.
Objectives of SAARC
The areas of cooperation under the reconstituted Regional Integrated Programme of Action which is pursued through the Technical Committees now cover the following:
Agriculture and Rural Development
Women, Youth and Children
Health and Population Activities
Science and Technology and Meteorology
Environment and Forestry
Human Resource Development, and
Transport
Working Groups have also been established in the following areas:
Biotechnology
Information and Communications Technology
Intellectual Property Rights
Energy
Tourism
The highest authority in the SAARC are the summits and they are held yearly once. The Chair of the Association would be the host country where the summit is held in a particular year. The Council of Ministers comprises of the foreign ministers and they meet generally two times annually.
Functions of the Council of Ministers
Policy formulation
Reviewing the progress of regional cooperation
Identifying newer areas of cooperation, and
Setting up additional mechanisms as required
The Standing Committee is composed of the foreign secretaries. It monitors and coordinates the programmes of cooperation, approves various projects including their funds, and gathers regional as well as external resources. This committee meets as and when required and reports to the Council of Ministers. SAARC also calls for meetings at the ministerial level on special issues or themes. There is also a Committee on Economic Cooperation which comprises of the Secretaries of Commerce. This Committee supervises regional cooperation in the economic domain.
SAARC Regional Centres
The SAARC Secretariat is supported by Regional Centres established in Member Countries to promote regional cooperation. These Centres are managed by Governing Boards comprising representatives from Member States, SAARC Secretary-General and the Ministry of Foreign/External Affairs of the host government. The Director of the Centre acts as Member Secretary to the Governing Board which reports to the Standing Committee.
TODAYS SOURCES:THE HINDU,THE TRIBUNE,INVESTOPEDIA, SAARC
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