Untitled Quiz

Equity Ratio

• Indicates the proportion of assets financed by shareholder equity
• Higher equity ratio indicates a company is less reliant on debt financing, potentially more financially stable

Price-to-Earnings (P/E) Ratio

• Shows how much investors are willing to pay for each rupee of earnings

Dividend Yield

• Measures the return on investment from dividends relative to the market price of the stock

Market Capitalization

• Calculated by multiplying the share price by the total number of outstanding shares

Receivables Turnover Ratio

• Measures how effectively a company collects on its receivables

Quick Ratio

• A liquidity ratio that excludes inventory from current assets, giving a more conservative view of liquidity

Interest Coverage Ratio

• Measures a company's ability to pay interest on its outstanding debt

Gross Profit Margin

• Indicates a company's efficiency in utilizing total assets to generate sales

Asset Turnover Ratio

• Evaluates how efficiently a company generates sales from its total assets

Price to Earnings (P/E) Ratio

• Focuses on investor expectations regarding profitability and growth

Safety Principle of Lending

• Emphasises the security of the lender's funds

Penal Interest for Loans

• Can be charged by banks on loans, cannot be capitalized
• The maximum allowable penal charge must be equal to the charges for non-individual borrowers for similar non-compliance

‘Security Belt-2024’ Joint Naval Exercise

• China, Iran, and Russia participate in the exercise

Prime Minister of Portugal

• Luis Montenegro was appointed as the new Prime Minister

Reasons for Inflation Rate Increase

• Rising food articles and energy prices are the main reason cited for the inflation rate increase

Reliance Industries Acquisition in Adani's Power Project

• Reliance Industries acquired a 26% stake in Adani's power project

IDEX Initiative

• Goals include enhancing the capabilities of the Indian Army and Air Force

Tata Power Solar Systems Limited Milestone

• Completed India's largest solar and battery energy storage project

Tata Power Solar Systems Partnership

• Partnership with Indian Institute of Technology Delhi (IIT Delhi)

Startup Mahakumbh 2024 Project

• Associated with supporting renewable energy initiatives

Tata Power Solar Systems Ltd Focus

• Focus on solar energy projects

Indian Oil Formula One Racing Fuel

• Storm petrol is the name of the fuel manufactured by Indian Oil for Formula One racing

Flipkart UPI Services Partnership

• Flipkart launched its UPI services in partnership with Axis Bank

All-in-Cost Includes

• Guarantee fees, ECA charges, expenses in both foreign currency and INR

Foreign Exchange Management (Borrowing and Lending) Regulations

• Govern both External Commercial Borrowings (ECB) and Trade Credit

Guarantee Fee and Costs for Credit Enhancement

• Maximum allowed guarantee fee and associated costs for credit enhancement is 2 percent of the principal amount

Borrower Requirements before Drawing Down on ECB

• Loan Registration Number (LRN) should be obtained before a borrower can draw down on an ECB

Reporting Requirements under ECB Framework

• Submission of a statutory auditor's certificate is NOT a requirement for reporting under the ECB framework

Action for Untraceable Entity Availng ECB/Trade Credit

• Revised Form ECB must be filed if a borrower is deemed an untraceable entity availing ECB/Trade Credit

Reporting of Actual ECB Transactions

• Borrowers must report actual ECB transactions within 7 working days

Changes to be Reported through Revised Form ECB

• Changes in repayment terms must be reported through a revised Form ECB

Consequences of Non-Compliance with ECB Reporting Requirements

• Borrowers found to have not complied with ECB reporting requirements for eight quarters are subject to penalties by the Reserve Bank

ECB Conversion to Equity

• A borrower can convert ECB into equity if both lender and borrower agree and certain specified conditions are met

Raising ECB under Corporate Insolvency Resolution

• An entity under corporate insolvency resolution can raise ECB if raising it will help improve their internal processes, and it is specifically permitted under the resolution plan

Refinance Rupee Loans through ECB

• Eligible corporate borrowers can refinance Rupee loans through ECB for capital expenditures in manufacturing and infrastructure, if classified as SMA-2 or NPA

Entities Permitted to Lend for Repayment of Rupee Loans

• Recognised lenders, excluding foreign branches/subsidiaries of Indian banks, are permitted to lend to borrowers raising ECB for repayment of Rupee loans under specific conditions

RBI's Monthly ECB Information Disseminated

• Information on the borrower's name, amount, purpose, and maturity of ECB is disseminated monthly on the RBI's website.

ECB Compliance Responsibility

• The borrowing entity itself is primarily responsible for ensuring compliance with ECB guidelines.

Trade Credit (TC) Raising Parties

• Only public sector corporations can raise Trade Credit (TC) for imports

Import Document for Trade Credit in Special Economic Zones (SEZs)

• An inter unit receipt generated through NSDL is treated as an import document for Trade Credit transactions involving Special Economic Zones (SEZs)

Security Offered for Trade Credit

• Movable assets, immovable assets, and guarantees are offered by an importer for raising Trade Credit.

Foreign Trade Policy of India Relation to Trade Credits

• The Foreign Trade Policy of India does not play a direct role in determining the permissible imports for which Trade Credits can be raised.

Financial Ratios

• Equity Ratio: Measures the proportion of a company's assets financed by shareholder equity.
• Price-to-Earnings (P/E) Ratio: Indicates how much investors are willing to pay for each dollar of earnings generated by the company.
• Dividend Yield: Shows the return on investment from dividends in relation to the stock's market price.
• Market Capitalization: Computed by multiplying the share price by the total number of outstanding shares.
• Receivables Turnover Ratio: Assesses the effectiveness of collecting receivables.
• Quick Ratio: Provides a more stringent measure by excluding inventory from current assets.
• Interest Coverage Ratio: Measures how easily a company can meet its interest obligations.
• Gross Profit Margin: Reflects the percentage of revenue that exceeds the cost of goods sold.

Asset Turnover Ratio

• Measures how effectively a company uses its assets to generate sales.

### Price to Earnings (P/E) Ratio

• Reflects investor expectations about a company's profitability and growth potential.

Lending Principles

• Safety: Ensures lender's funds are secure.
• Penal Charges: Cannot be capitalized or treated as penal interest.
• Maximum Penal Charges: For individual borrowers should not exceed those for non-individual borrowers.

International Relations

• Joint Exercise: China, Iran, and Russia naval forces participated.

### Political Developments

• Portugal: Luis Montenegro became Prime Minister after 8 years of Socialist rule.

Inflation

• Primarily driven by increases in food articles, crude petroleum, and natural gas.

Corporate Acquisitions

• Reliance Industries: Acquired a 26% stake in Adani's power project.

### Indian Defense & Energy

• IDEX Initiative: Specifically benefits Indian Army and Air Force.
• Tata Power Solar Systems: Completed India's largest Solar and Battery Energy Storage Systems project, in partnership with Indian Institute of Technology Delhi (IIT Delhi).
• Startup Mahakumbh 2024: Groundbreaking initiative linked to renewable energy.
• Tata Power Solar Systems: Fully integrated solar company.
• Indian Oil: Introduced 'Storm' petrol for the motorsports industry.

### Financial Services

• Flipkart: Launched UPI services in collaboration with Axis Bank.

### External Commercial Borrowings (ECB)

• All-in-Cost: Includes interest rate, fees, expenses, and charges in both foreign currency and INR.
• Regulations: Governed by the Foreign Exchange Management (Borrowing and Lending) Regulations
• Guarantee Fee: Maximum of 2% of the principal amount.
• Loan Registration Number (LRN): Required from RBI before drawdown.
• Reporting: Borrowers must report actual transactions within seven working days after the end of the month.
• Revised Form ECB: Required to be filed for untraceable borrowers.
• Compliance: Failure to comply with reporting for eight quarters results in being treated as untraceable
• Conversion to Equity: Permitted under specific conditions.
• Corporate Insolvency: ECB raising only allowed if explicitly permitted by resolution plan.
• Refinancing: Eligible corporate borrowers classified as SMA-2 or NPA can refinance Rupee loans for capital expenditure using ECB.
• RBI Transparency: Information regarding ECB borrowers, amount, purpose, and maturity is published on their website.
• Borrower Responsibility: Borrowing entity is responsible for ensuring compliance with ECB guidelines.

Trade Credit (TC)

• Special Economic Zones (SEZs) and Developmental Trade Areas (DTAs): Units and developers in these zones can raise TC for imports.
• Inter-Unit Receipt: Treated as the import document in TC transactions related to SEZs.
• Securities: Importers can use movable and immovable assets as collateral for raising Trade Credit.
• Foreign Trade Policy: Governs permissible imports.

### OMCs (Oil Marketing Companies)

• ECB for Working Capital: Minimum average maturity period of 3 years.

### Startups

• Borrowing Limit: USD 3 million or equivalent per financial year.
• Security: Can include movable, immovable, and intangible assets.
• Lender Requirements: Must be a resident of a FATF compliant country.

### Banking System

• Correspondent Bank Receipts: Recognized as a liability to the banking system.
• Net Demand and Time Liabilities (NDTL): Borrowings through qualifying instruments are excluded from NDTL computation.
• Scheduled Co-operative Banks: Loans/refinance from NaBFID are excluded from NDTL for CRR but not for SLR.
• ECGC Guarantee Claims: Classified differently and not included in NDTL liabilities.
• Subsidy Received: Exempted from NDTL for CRR maintenance if kept as a zero percent interest time deposit.
• Inter-Bank Liabilities: Exempted from NDTL for CRR computations
• RBI Loans/Refinance: Excluded from NDTL computation for both CRR and SLR.

### Banking Regulations

• Commission, Brokerage, Discount on Shares: Cannot exceed 2.50%
• Reserve Fund Transfer: 25% of profits must be transferred to the reserve fund before declaring dividends.
• Shareholding Limits: Cannot hold shares exceeding 30% of paid-up share capital of another company.
• RBI Control of Advances: Empowered by Section 21.
• Interest Rate Scrutiny: Not subject to court scrutiny according to Section 21A.
• Loans Secured by Own Shares: Not allowed.

Statutory Liquidity Ratio (SLR)

• Current Rate: 18% as decided by the Reserve Bank of India.
• Unencumbered Dated Securities: Government of India securities can be counted towards SLR.
• Repo Borrowings: Exempt from CRR/SLR computation.
• Maximum Limit: 40% of NDTL.

### Investments

• Government Securities: Held in SGL accounts or other specified accounts.
• Cash Management Bills: Treated as Government of India Treasury Bills and can be counted as SLR securities.
• Available for Sale (AFS): Fair valued at least quarterly.
• Fair Value Through Profit or Loss (FVTPL): Securities classified under the HFT sub-category must be fair valued daily.
• Subsidiaries, Associates, Joint Ventures: Held at acquisition cost.
• Reclassification of Investments: Board of Directors approval required.
• HTM (Held To Maturity): Carrying value of investments sold out of HTM cannot exceed 5% of the opening carrying value of the HTM portfolio.
• Sales to RBI: Excluded from regulatory limit.
• Impairment Evaluation: At least on a quarterly basis.
• Investee Status Changes: Reclassified when investments cease to be subsidiaries, associates, or joint ventures.

### National Bank for Agriculture and Rural Development (NABARD)

• Headquarters: Mumbai.
• Refinance to Banks: Provided against long-term credit to agriculture and rural development.

### Banking Licensing

• Commercial Banks: Minimum paid-up voting equity capital of ₹5 billion.
• Payment Banks: Minimum paid-up capital of ₹100 crore.
• Shareholder Voting Rights: Maximum 10% of total voting rights.
• Capital Ratio: Minimum 4:2:1 for Authorized:Subscribed:Paid-up capital.
• Small Finance Banks (SFBs): Minimum capital requirement of ₹200 crore.

### Customer Records

• Paid Cheques: Customers must keep them for at least 8 years for record purposes.

### Micro, Small, & Medium Enterprises (MSMEs)

• Payment Period: Supplier-buyer agreement cannot exceed 45 days from acceptance date.
• Compound Interest: Buyer is liable to pay three times the amount due if payment delay occurs.
• Dispute Resolution: Referred to the Micro and Small Enterprises Facilitation Council.
• Nayak Committee: Formed to evaluate the adequacy of institutional credit to the SSI sector.
• Collateral-Free Loans: Mandatory limit recommended to be increased to Rs. 10 lakh.
• Standby Credit Facility: To be extended by banks to MSEs for unforeseen circumstances.
• Loan Application Rejection: Banks must provide written reason within Board approved sanction time norms.
• Credit Guarantee Scheme: Reviewed by a working group under the chairmanship of Shri V.K.Sharma.
• High-Level Committee: Established to evaluate the flow of credit to the MSE sector.
• Credit Information Display: Banks must prominently display credit information on their websites.
• Credit Limit Increases: Banks should consider MSE borrower demand patterns.
• Guarantee Coverage Limit: Maximum of ₹500 lakh per borrower.

### Non-Resident Indian (NRI) Accounts

• Savings Account Conversion: To NRO account upon obtaining NRI status.
• Non-Resident External (NRE) Account: Not to be used for local funds.