QUIZ – 2020: Insights Current Affairs Quiz, 10 June 2020

Solution: c)

Recently Finance Minister Nirmala Sitharaman announced Partial Credit Guarantee Scheme (PCGS) 2.0 worth Rs 45,000 crore.

Under the modified PCGS, sovereign guarantee of up to 20 per cent of first loss will be provided to state-owned banks for purchase of bonds or commercial papers of NBFCs, MFIs and housing finance companies (HFCs) having a credit rating of AA or below, including unrated paper with original maturity of up to one year.

The Cabinet has also extended the time period of the scheme from June 30, 2020 to March 31, 2021 for purchase of pooled assets of the distressed entities.
Since NBFCs, HFCs and MFIs play a crucial role in sustaining consumption demand as well as capital formation in small and medium segment, it is essential that they continue to get funding without disruption, and the extended PCGS is expected to systematically enable the same.

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Solution: a)

FM Nirmala Sitharaman launches Ease 3.0 for tech-enabled banking. This move is expected to change the customer’s experience at the Public Sector Banks (PSBs).

What is it?

Ease (Enhanced Access and Service Excellence) 3.0 reform agenda aims at providing smart, tech-enabled public sector banking for aspiring India.

New features that customers of public sector banks may experience under EASE 3.0 reforms agenda include facilities like:

• Palm Banking for “End-to-end digital delivery of financial service”.
• “Banking on Go” via EASE banking outlets at frequently visited spots like malls, stations, complexes, and campuses.

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Solution: c)

The government is exploring changes to the equalisation levy, and may stop charging the tax on digital transactions either partially or in its entirety for a year as it works on the options.
Many Indian startups and stakeholders are also pushing to shelve or reduce the 6% equalisation levy, the so-called Google tax, charged on the advertising revenue that overseas companies such as Google, Facebook and Netflix generate from India. The burden of this tax eventually falls on the local startups and others who advertise on these platforms, as most digital majors pass on it to them. The government is looking at this as well.
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Solution: b)

Supreme Court had asked government to look into the feasibility of hydrogen-based tech to deal with vehicular air pollution in capital.

At the heart of the fuel cell electric vehicles (FCEV) is a device that uses a source of fuel, such as hydrogen, and an oxidant to create electricity by an electrochemical process. Put simply, the fuel cell combines hydrogen and oxygen to generate an electric current, water being the only byproduct. Like conventional batteries under the bonnets of automobiles, hydrogen fuel cells too convert chemical energy into electrical energy.

While the fuel cells generate electricity through an electrochemical process, unlike a battery-electricity vehicle, it does not store energy and, instead, relies on a constant supply of fuel and oxygen — in the same way that an internal combustion engine relies on a constant supply of petrol or diesel, and oxygen. In that sense, it may be seen as being similar to a conventional internal combustion engine.

Fuel cells have strong advantages over conventional combustion-based technologies currently used in many power plants and cars, given that they produce much smaller quantities of greenhouse gases and none of the air pollutants that cause health problems. Also, if pure hydrogen is used, fuel cells emit only heat and water as a byproduct. Such cells are also far more energy efficient than traditional combustion technologies.

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Solution: a)

The Reserve Bank relaxed the leverage ratio (LR) for banks to help them boost their lending activities.

The leverage ratio stands reduced to 4 per cent for Domestic Systemically Important Banks (DSIBs) and 3.5 per cent for other banks effective from the quarter commencing October 1, 2019.

“Both the capital measure and the exposure measure along with Leverage Ratio are to be disclosed on a quarter-end basis. However, banks must meet the minimum Leverage Ratio requirement at all times,” RBI said.

The leverage ratio is defined as the capital measure divided by the exposure measure, expressed as a percentage. The capital measure is tier 1 capital and the exposure measure includes both on-balance sheet exposure and off-balance sheet items.

The leverage ratio measures a bank’s core capital to its total assets. The ratio uses tier 1 capital to judge how leveraged a bank is in relation to its consolidated assets. Tier 1 assets are ones that can be easily liquidated if a bank needs capital in the event of a financial crisis. So, it is basically a ratio to measure a bank’s financial health.

The higher the tier 1 leverage ratio, the higher the likelihood of the bank withstanding negative shocks to its balance sheet.

The leverage ratio is used as a tool by central monetary authorities to ensure the capital adequacy of banks and place constraints on the degree to which a financial company can leverage its capital base.

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