Politics & the Nation
  • National roaming charges may soon be a thing of the past
    • Mobile users may soon be spared from shelling out roaming charges within India. A high-level Department of Telecom (DoT) panel, which was asked to come up with strategic changes for the communications industry, has recommended that the entire country be considered as a single region, a move that will make paying a roaming fee while travelling a thing of the past. Currently, the country is divided into 22 circles and consumers pay roaming charges when they make or receive calls outside their home circle. The DoT panel has recommended that doing away with the circle concept will help deal with ‘roaming issues’.
    • The panel has, however, not specified any timeframe for the merger of all circles into a single entity from the licensing perspective.
    • Mobile phone companies will oppose any moves to do away with roaming charges as this fee constitutes up to 10% of the industry’s revenues. All telcos combined garner about Rs. 12,000 crore annually from roaming charges.
Finance & Economy
  • Indian banks pitch for yuan trade
    • A few local banks have sounded out the regulator on the possibility of a new currency arrangement between India and its largest trading partner, China. They are suggesting a simpler and less expensive mechanism that would bypass the dollar and allow trade payments in local currencies.
    • Since the Indian rupee and the Chinese yuan are largely nonconvertible currencies, export and import transactions between the two countries have dollar legs. The rupees that an Indian buyer pays his bank for Chinese imports are converted into dollars, which, in turn, is converted into yuan with the help of other banks for paying the Chinese seller. It’s a transaction that can take 2-3 days due to differences in time zones, and involves certain operational costs that can be pruned, if payments can be directly settled in yuan and rupees.
    • Bankers think that the spiralling trade volumes between the two countries could serve as the bedrock for a gradual development of a rupee-yuan market, where banks would give regular spot and forward quotes on the exchange rate, just as they do for rupee-dollar currency trades. However, it would call for the Reserve Bank of India, or RBI, and the People’s Bank of China, or PBOC, the Chinese monetary authority, to agree on a mechanism that could have market as well as diplomatic implications.
    • A direct yuan-rupee trade would cut transaction time. In fact, the transactions could become real time. Also, the transaction cost would be lower.
    • Bilateral trade using local currencies would require Indian banks opening yuan nostro accounts — which can be used for yuan trades —in Hong Kong or the mainland. This would need regulatory approvals from both countries. What happens with these nostro accounts is: A bank with a yuan nostro account can shorten the transaction chain. It will first sell rupees (received from the Indian importer) to buy dollars and then find a bank that will receive the dollars and sell yuan that can be immediately credited to the yuan nostro account.
    • Interestingly, in an effort to internationalise the currency, China has permitted limited trading of yuan in the Hong Kong offshore market for trade and certain capital account transactions. Also, in recent times it has entered into special currency arrangements with various countries. Last year, China struck a ‘currency-swap’ agreement with Brazil that allows payment for imports from China in yuan and imports from Brazil in real. It has also signed pacts with Malaysia, Argentina, South Korea, Belarus and Singapore. Across markets the deals were interpreted as China’s efforts to internationalise the yuan and slowly pave the way to help yuan eventually replace dollar as the world’s reserve currency.
  • On currency interventions by central banks
  • Govt. to pay banks for costs involved in opening no-frills a/cs
    • The financial inclusion drive is set to get a boost with the government deciding to set up a Rs. 800-crore fund to encourage banks to reach out to the financially excluded population.
    • The fund will compensate banks for costs incurred on providing no-frills accounts, and also for other expenses involved in serving non-banked areas. The new fund aims to help banks bridge the funding gap in setting up rural branches and appointing business correspondents.
    • The new fund will be separate from the Rs. 1,000-crore Financial Inclusion Fund (FIF) and Financial Inclusion Technology Fund (FITF).  These funds are set up with Nabard focus on spreading financial literacy and providing technology support to regional rural banks and co-operatives.
    • The government aims to provide banking facilities to all areas with more than 2,000 people by March, 2012.
    • RBI has started its outreach programme to evolve a workable model for banking at the village level. Currently, out of the 600,000 habitations in the country, only about 30,000 have a commercial bank branch.
    • Financial exclusion of the rural hinterland:
      • Only 30% of bank branches in the rural areas
      • Rural areas house 72.2% of the country's population
      • Rural India accounts for just 9% of total deposits
      • Has only 7% share of the total credit 10% of life insurance business comes from rural India
  • Man Booker Prize for Jacobson
    • British Author Howard Jacobson has won the prestigious Booker Prize for his comic novel 'The Finkler Question', beating five others including two-time winner Peter Carey and the bookies' favourite Tom McCarthy. It is the first time in the awards 42-year history that a comic novel has been voted winner of the £50,000 prize on Tuesday night.
    • 'The Finkler Question', which follows the friendship between three mature Jewish men, two of whom have been recently widowed, was hailed by judges as “a profound and wise book”. The book tackles the relationship between three friends — a former BBC producer Julian Treslove, Sam Finkler a popular Jewish philosopher and their former teacher Libor Sevick. It had been the rank outsider on the six strong shortlist.
  • Should the US govt. have infused more TARP funds?
    • Explaining that infusion of more funds into the banks could have resulted in lower losses and quicker and better recovery, TT Ram Mohan gives us an insight into the big picture about how the financial crisis was handled in the US.  A very good read.  Certainly enhances our understanding of the the crisis and how it was tackled.
  • Chile miners’ rescue
    • What happened in Chile is perhaps one of the most unforgettable moment for the entire globe.  33 miners who were trapped inside a mine since August 5, were all finally rescued in a rarest of rare operations.
    • Take a look at this news story.  A very happy moment indeed.
Language Lessons
  • boggy: Adjective
    • (of soil) soft and watery