09.09.2007

• As I am back from my long tour, we resume our daily notes. I have answered your shout-box queries in today’s Discover It blog. Take a look at it here.
• And we have launched our quiz contest. It will stay open till September 16^th. Do take part in the contest as quickly as you can and try to win the prize of Rs. 1,000/-. Much more than the money part, it will surely encourage you to read on and stay prepared for the exams.
• Singapore likely to give QFB status to three Indian banks
• SBI, Bank of India and Bank of Baroda are likely to get QFB (Qualified Bank Status) from Singapore government.
• This will permit Indian banks to open more branches and get more depositors.
• This is being done consequent to India and Singapore signing a CECA – Comprehensive Economic Cooperation Agreement. This CECA was signed about 2 years ago.
• Similarly three of Singapore’s banks viz., Development Bank of Singapore, Overseas Chinese Banking Corporation and United Overseas Bank will be given the QFB status by India.
• Do you remember the controversy about bank recognition that we have noted earlier in our Discover It blog? Take a look at it here.
• Why do banks lend money to PE (Private Equity) firms?
• The aim is to sell the loans to investors and collect fees from both the groups – that is PE firms as well as investors.
• What is the difference between traditional bank loans and covenant-lite loans that are usually given by banks to the PE firms?
• Traditional loans carry strict requirements that dictate when the borrowers have to repay them. Some stipulate that the borrower’s profitability must improve every year; if it doesn’t, the lender has the right to renegotiate the loan at a higher interest rate or demand repayment immediately.
• Covenant-lite loans, by contrast, come with relatively few stipulations. Payment in kind bonds are just as loose, allowing borrowers to pay off the debt by issuing more securities. Such freewheeling terms are advantageous for borrowers but risky for those holding the debt.
• What happens is covenant-lite loans are given by banks to PE firms. Banks in turn securitize these loans and sell them to individual investors.
• What are the two financial inclusion funds that are set up by the government of India as part of its commitment in the budget exercise?
• Financial Inclusion Fund
• Financial Inclusion Technology Fund
• Both of them put together are likely to have a corpus of about Rs. 1000 crores. The corpus would be invested and the returns from the investment used for developmental and promotional intervention in financial inclusion.
• NABARD is still working out the finer contours of the funds.
• What is onychophagy?
• It is the medical term for nails that have been bitten enough to become deformed.
• What is oenology?
• It is the study of all aspects of wine making in the world. It is the study of wine production.
• Cricket
• I just happened to see that we are back to our old ways… of throwing away matches. England beat India to clinch the 7 match series of ODIs. Though to be fair, it looks part of the reason for India’s loss is bad umpiring.