✅How has The Banking Regulation Act been amended?

Cooperative banks have long been under dual regulation by the state Registrar of Societies and the RBI.

As a result, these banks have escaped scrutiny despite failures and frauds.

The changes to The Banking Regulation Act approved by Parliament in September 2020, brought cooperative banks under the direct supervision of the RBI.

🔵🔽✅Changes brought

The amended law has given RBI the power to supersede the board of directors of cooperative banks after consultations with the concerned state government.

Earlier, it could issue such directions only to multi-state cooperative banks.

Also, urban cooperative banks will now be treated on a par with commercial banks.

And a cooperative bank can, with prior approval of the RBI, issue equity shares, preference shares, or special shares to its members or to any other person residing within its area of operation, by way of public issue or private placements.

It can also issue unsecured debentures or bonds with a maturity of not less than 10 years.

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This essentially means non-members can become shareholders of the bank, and this will allow the RBI to merge failing banks quickly.

⏬Open Market Operations (OMO)⏬

OMOs is one of the quantitative monetary policy tools which is employed by the central bank of a country to control the money supply in the economy.

It is a part of the Market Stabilization Scheme (MSS) by the RBI.

OMOs are conducted by the RBI by way of sale or purchase of government securities (g-secs) to adjust money supply conditions.

The central bank sells g-secs to remove liquidity from the system and buys back g-secs to infuse liquidity into the system.

Commerce optional paper 1

Commerce Optional (UPSC-IAS):Daily Answer Writing Practice

https://www.civilservicegurukul.com/category/commerce-optional-daily-answer-writing-practice/


👆🏻 Civil Service Gurukul have updated all daily answer writing practice questions in one category.

In this initiative, we have included last 20 years previous questions and current affairs questions.

this will be very helpful for Commerce Optional students.

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👆OPTIMUM CAPITAL STRUCTURE
FM topics of Paper 1 of Commerce Optional.
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👆FACTORS DETERMINING CAPITAL STRUCTURE
FM topics of Paper 1 of Commerce Optional.
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👉What are Participatory Funds and Non-Participatory Funds?

👁The amendment to Section 24 of the LIC Act, brought prior to commencing the IPO, segregated the previously single 'Life Fund' into the participatory and non-participatory funds.

✅Under a participatory policy, a policyholder can get a share of the profits of the company.

✅This is received as a bonus. Examples of such products offered by LIC include Jeevan Labhand BachatPlus.

✅No such sharing of profits happens under non-participatory products, which under the LIC fold includes policies such as Saral Pensionand Nivesh Plus.

✅As all insurance companies do, LIC also reinvests premium monies that policyholders pay.

The profits or surplus that comes about, as a result, was till September last year held in one single fund. This was the Life Fund.

✅The surplus was divided in the 95:5 ratio between policyholders(in the form of bonuses)and shareholders(in the form of dividends).


👉What has the Amendment changed?

But the amendment to Section 24 of the LIC Act has necessitated the segregation of the Life Fund into participatory and non-participatory funds, depending on the nature of the policies they support.

The amendment stipulates terms on how surplus is to be shared with respect to participatory and non-participatory funds.

✅As for non-participating funds, surplus from the non-participating business would be transferred to shareholders.

✅Surplus from participatory business, however, would be shared between policyholders and shareholders.

👉How does this change impact the shareholder?

✅The change, especially the one that has enabled 100% of the surplus in non-participatory funds to flow to the shareholder, has led to a massive jump in the Indian Embedded Value, or IEV.

✅IEV is a measure of future cash flows in life insurance companies and the key financial gauge for insurers.

✅The embedded value will help establish the market valuation of LIC and determine how much money the government raises in the flotation.

✅That will be crucial for the government to help meet its divestment targets and keep its fiscal deficit in check.

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✅What is Special Drawing Rights?✅

💠The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

💠The SDR is not a currency.

💠It is a potential claim on the freely usable currencies of IMF members.

💠As such, SDRs can provide a country with liquidity.

💠A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

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🏵▶️Civil Service Gurukul Team are happy to announce that we are going to launch Daily Answer Writing Practice (free of Cost) for UPSC Commerce Optional and GS Paper -3 for UPSC Mains 2022 from 06-06-2022.

▶️Program will be guided by IAS Shubham Kumar (AIR-1), IAS Raunak Agarwal ( AIR-13) , IAS SAMEER KISHAN ( AIR-350 ) and CA Pranay Sharma ( CA, LLB, CCAB, FAFD,DISA,MBA).🏵
For more details Contact @capranaysharma

👆✅Topic :- Management by Exception⏺
🏵Relevant for Paper 2 of UPSC Commerce Optional
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🏵Relevant for Paper 2 of UPSC Commerce Optional
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