• I was asked to explain the difference between repo and reverse repo rates in the shoutbox.
    • Ans: I have covered these terms on quite a few occasions earlier in both the blogs. A search for the terms 'repo' and 'reverse repo' would reveal you all the posts containing these words and you can perhaps get a quick grasp of the terms easily.

However, to recap for the benefit of all:

A repo is the short form for 'repurchase obligation'. In this the seller agrees to repurchase the security being sold at a later date for a price that is agreed upon now. The seller delivers the securities to the buyer with a promise to buy these securities for an agreed price at a later date. RBI sells gilts i.e., government securities to banks and financial institutions. This is how RBI mops up money from the market. The 'buyer' will pay money in return for the securities. The buyer will enter the transaction because; it is going to get a good rate of return for the money it is holding. Mere holding cash will not yield any return; isn't it?

A 'reverse repo' transaction, as the name suggests is the opposite of a 'repo' transaction. The RBI purchases securities from the market (again the banks and financial institutions) by offering a good price for them with an obligation to sell these securities at a later date for an agreed price. This way, it pumps in money into the market. It mops up securities and pumps money into the system. This is useful to the banks and financial institutions because, they may need money to meet their immediate requirements. If they have assets (government securities) with them, that won't help them to meet their immediate requirement of funds. So they sell these securities to RBI and get funds in return.

  • Pharmaceutical research institute in Hyderabad
    • NIPER – National Institute of Pharmaceutical Education and Research will be set up in Hyderabad.
    • Three more such institutes will be set up in Kolkata, Ahmedabad and Hajipur (Bihar).
    • There is already one existing at Mohali (Punjab).
  • Bonus limit to be raised
    • The Indian Labour Conference has agreed to amend the Payment of Bonus Act, 1965 to increase the bonus limit for workers.
    • The employers wanted the bonus limit to be raised to Rs. 7,500. The employees wanted it to be raised to Rs. 10,000. The ministry of labour will have to take a call on the quantum now, before a bill to amend the act is introduced in the Parliament.
  • Optical cloak: you can be invisible!!!
    • Researchers at the Purdue University, Indiana (US) have created a design that could render people or objects invisible by placing an optical ‘cloak’ around them.
    • The tool looks like a spiky, round hairbrush, and consists of an array of ‘nano’ or extremely tiny needles. It bends light rays, deflecting them away from the cloaked object, so that it is not illuminated – and hence is invisible to the human eye.
  • Commonwelath Secretary General
    • Don McKinnon is the current Secretary General.
    • An NRI, Dr. Mohan Kaul is throwing his hat into the ring to succeed Don McKinnon.
  • Cricket World Cup
    • Australia lifted the Cup by beating Sri Lanka in the finals.
  • Greenshoe option
    • ICICI Bank is raising about Rs. 20,000 crores from the market through a combination of ADS (American Depository Share) issue and a local issue.
    • Papers reported that the bank may look at green-shoe options going forward, if required. What is meant by this ‘green-shoe option’?
    • It means, if the issue is oversubscribed, it may decide to keep a portion of the excess mop up from the issue.
  • Cherrapunji loses its title
    • I am sure many of you would know Cherrapunji (also spelled Chirrapunji sometimes) as the wettest place on Earth. It is the place where there is heaviest rainfall every year. It is in Meghalaya.
    • This title is now taken over by Mawsynram, another place in the same State.
    • One nickname that Meghalaya has is ‘abode of clouds.’