Former SBI Managing Director, Hemant Contractor, has been chosen to head the Pension Fund Regulatory and Development Authority (PFRDA). The position of Chairman has been vacant for almost a year after the previous Chairman Yogesh Aggarwal resigned over differences with the Finance Ministry regarding the appointment of a member to PFRDA. R.V.Verma, the Finance member, was filling in as Acting Chairman.
Interim PFRDA was established by the government through a bill for the same introduced in Parliament in 2003. Its goal was to promote, develop and regulate pension sector in India. The Pension Fund Regulatory & Development Authority Act was passed in 2013. PFRDA is authorized by Ministry of Finance, Department of Financial Services.
PFRDA must consist of a Chairperson and maximum of five members, out of which a maximum of three can be full time members. Members are appointed by the central government.
One of the major roles of the PFRDA today is to oversee NPS (National Pension System). NPS is a pension scheme run by the Government of India. It has been mandatory for central government employees from 2004 and voluntary for unorganized sector workers since 2009.
The global rating agency S&P has raised India’s sovereign rating outlook to stable from the earlier negative. The rating improvement makes India a more viable and safer investment avenue for foreign investors. With this move, all three credit rating agencies now predict a stable outlook for India, even though it still has the lowest investment grade rating. The sovereign rating remains constant at BBB- for long term and A3 for short term.
The change is believed to have been caused by the strong political mandate given by the Indian populace to the current Central Government and the improvement in India’s external account. The new government’s move to emphasize fiscal discipline while promoting greater economic growth has inspired confidence. However, S&P has warned that failure to implement proposed reforms or deterioration in the economic scenario could trigger a downgrade.
The outlook for four Indian and six private companies that are linked to India’s sovereign rating have also been raised to stable.
An upgrade in rating is possible if the economic and fiscal indicators improve further. Also, the economy must show a real per capita GDP growth rate of at least 5.5%
ICICI Bank launches ‘Smart Star’ account, a minor operated savings account for minors above 10 years of age
ICICI Bank launched ‘Smart Star’ account, a savings account for minors above 10 years of age. The account will be opened in the name of the minor and will offer kid with a tailored cheque-book and a debit card with a picture of his/ her choice. The permits minors to operate their accounts individually. This will benefit to teach kids a practice of saving and responsibility of spending sensibly.
Minors will be able to start several banking transactions including issuing cheques, paying bills, recharge mobile phones, open fixed deposits and recurring deposits amongst others. They will also have access to banking networks such as ATM, mobile, Internet banking, etc.
Finance Ministry is in the final stages of the course to double the commission to banks at 2% of the quantum of funds they transmit to individual beneficiaries under the government’s Direct Benefit Transfer (DBT) scheme. The current rate of commission is 1% per for every transaction under the DBT.
The government transfers money to the bank account of consumers of kerosene, LPG, etc. via its DBT scheme in order to do away with the loopholes and ascertain corruption free delivery. Now, the Finance Ministry plans that for all accounts, whether under Pradhan Mantri Jan Dhan Yojana or otherwise, if subsidy is routed via the DBT scheme, 2% of the total amount will be given to banks as administration cost. This money will not be cut from the consumer’s account but the government will spend extra 2%.
Example, if in a year, a bank transfers Rs 10 crore as DBT payments, then the government will transfer Rs 10.2 crore to that bank.
Banks play a very important role as Govt agents in routing subsidies via DBT Schemes.