India's Economy

Question 1

What actions can the Government take to reduce deficit?

Answer 1

Reduce revenue expenditure

Rationalize subsidies

Question 2

What are Payments Banks?

Answer 2

Payment Banks

Question 3

Why are Payments Banks being established?

Answer 3

To promote financial inclusion

Question 4

Who is eligible to promote a Payment Bank

Answer 4

Mobile telephone companies

Supermarket chains

Question 5

What activities may a Payment Bank engage in?

Answer 5

Issue credit card
Issue debit card
Lending activities

Question 6

What is a Masala Bond?

Answer 6

• Rupee denominated borrowings by Indian entities in overseas markets
• name coined by IFC which floated first masala bonds on London Stock Exchange

Question 7

Which was the first Indian company to issue Masala bonds?

Answer 7

• HDFC
• July 2016
• Raised INR 30 billion from Masala Bonds

Question 8

Who issued the first masala bond?

Answer 8

• First Masala Bond was issued by IFC, backed by World Bank
• to fund infrastructure projects in India
• It raised INR 10 billion

Question 9

What company issued the first corporate green masala bonds?

Answer 9

• NTPC
• August 2016
• INR 20 billion

Question 10

What was the first masala bond?

Answer 10

• listed by International Finance Corporation, the investment arm of the World Bank on London Stock Exchange to fund Indian infrastructure projects
• raised INR 10 billion

Question 11

What is the significance of masala bonds?

Answer 11

• issued to foreign investors and settled in USD
• therefore currency risk lies with the investor and not the issuer
• vibrant market for masala bonds opens up new avenues for finance and props up rupee

Question 12

What is External Commercial Borrowing (ECB)

Answer 12

-Loans in India made by non-resident lenders in foreign currency to Indian borrowers
-widely used by Indian corporations and Public sector undertakings to gain access to foreign money
-include commercial bank loans, buyer’s credit,
supplier’s credit, floating rate notes, fixed rate bonds etc
* ECB cannot be used for investment in stock market or speculation in real estate

Question 13

Who monitors and regulates ECB guidelines and policies?

Answer 13

• Department of Economic Affairs
• Ministry of Finance
• Government of India
• Reserve Bank of India

Question 14

What is import cover?

Answer 14

• The number of months of imports that could be paid for by a country’s national reserves