25.10.2010

Politics & the Nation

• Was it just shooting from the hip?  Or does it have more than what meets the eye?
• Take a look at this news report about the statement made by an interlocutor in the Kashmir issue.  After reading the report, we were dumbfounded and were wondering whether or not the statement was made with an intent to create more chaos.
• Whose purposes are such statements serving?  Is it India’s or Pakistan’s?

Finance & Economy

• Diwali gift: Retail investors to be allowed 2 lakh in IPO
• Retail investors will get to double their bets on initial public offerings as the market regulator is set to raise the limit to Rs 2 lakh, the first revision in five years, as it attempts to keep pace with the eroding value of the rupee.
• Unlike most developed markets where investment bankers have the discretion to allot shares to their favoured clients in an IPO, the Indian regulator has mandated specified portions that go to funds, wealthy individuals and retail investors.
• In case of public issues done on a book-building basis, the rules now in place mandate that 35% of the offering should be allotted to retail investors, 15% to non-institutional investors and the remaining 50% to institutions.
• Nearly 75% of the retail applications in recent public offerings were for value between 80,000-1,00,000, said the Sebi study. In the non-institutional category, the number of applications below 5 lakh was negligible.
• The portions reserved for wealthy individuals and corporate treasuries have been consistently oversubscribed by 20-25 times as they borrow heavily to benefit from pop-up listing, while in the retail category that depends on savings, it was 3-5 times.

• Microfinance to get a regulator in Nabard
• A worried government has put on fast track the proposed bill to regulate micro-lenders, as it seeks to ensure that over-regulation by states does not kill the sector that is envisaged to play a big role in furthering financial inclusion.
• The finance ministry could move a bill in the winter session of Parliament that will make Nabard responsible for regulation of all non-profit microfinance institutions structured as trusts, cooperatives, or mutual benefit societies.
• At present, micro-lenders follow the relevant sector law, depending on the way they are structured. The new law will treat microfinance as a separate business and will also consider bringing nonbanking finance companies in the microfinance sector under the ambit of the legislation. The decision to fast-track the bill follows the October 15 ordinance, or emergency law, issued by Andhra Pradesh that imposed severe restrictions and debt restructuring obligation on lenders following a spate of suicides that were blamed on coercion by microlenders to recover their dues.
• As many as 15 states already have laws on money lenders in place under which they attempt to regulate the high interest rates and usurious practices followed by micro-lenders.
• The state governments say although the RBI protects the interests of the depositors, there is no framework to safeguard the interests of the borrower who are at times charged interest rates as high as 30%. The finance ministry wants to prepare a comprehensive law after discussing the issue with the regulators.
• The Micro Financial Sector (Development and Regulation) bill was first introduced in Parliament in 2007 and referred to the standing committee on finance. However, the bill subsequently lapsed due to dissolution of the Lok Sabha and has been in the works since then as the government decided to again hold consultations with the stakeholders.
• The new draft of the bill defines the role of the regulator more explicitly. It has a provision for registration of microfinance organisations collecting thrift from individual members of self-help groups or through a group mechanism. The bill provides for creation of a reserve fund that would be 15% of a microfinance institution’s net profit or surplus.
• The bill will also empower Nabard to appoint microfinance ombudsmen for settlement of disputes.

• Green Bank in works to power renewable energy projects
• The government is planning to set up a green bank by leveraging the Rs. 5,000-crore national clean energy fund expected annually through a cess on domestic and imported coal.
• The proposed bank will fund projects to generate electricity from wind, solar, tidal and other renewable sources, which currently contribute about 6,000 MW in India's power capacity of about 150,000 MW.
• India has the potential to generate 80,000 MW from non-conventional sources, according to estimates of the ministry for new and renewable energy (MNRE).
• The government levies a Rs. 50 per tonne cess on both domestically-produced and imported coal. The cess aims to fund research and innovative projects in clean energy technology.
• MNRE-proposed bank will be linked with the Indian Renewable Energy Development Agency (IREDA), a government-owned non-banking financial company.
• IREDA, established in 1987, promotes renewable energy and energy conservation projects.
• The concept of such a bank is not new. Clean Energy Development Bank of Nepal is operational since 2006 in a joint venture with the Netherlands-based financial institution FMO.
• MNRE expects rapid expansion of renewable energy projects, especially solar power in the country that will require dedicated funding. India is already one of the world leaders in generating wind energy.

International

• The outcome at the Gyeongju G20 meeting of Finance Ministers
• The meet saw Europe cede two seats on the 24-member IMF board to emerging economies and the Bric four of Brazil, Russia, India and China all join the ranks of the countries with the 10 largest quotas in the Fund, with transfer of 6% of quotas from developed to developing countries.  Quotas determine voting rights, financial commitment and access to aid.
• The Group of 20 major economies agreed on Saturday to shun competitive currency devaluations but stopped short of setting targets to reduce trade imbalances that are clouding global growth prospects.
• Take a look at this new report which lists all the major issues that were deliberated upon at the meeting.

Language Lessons

• shrivel up: Verb
• Wither, as with a loss of moisture
• smorgasbord: Noun
• A collection containing a variety of sorts of things; An assortment of foods starting with herring or smoked eel or salmon etc with bread and butter; then cheeses and eggs and pickled vegetables and aspics; finally hot foods; served as a buffet meal
• aspic: Noun
• Savoury jelly based on fish or meat stock used as a mould for meats or vegetables
• yo-yo: Noun
• A toy consisting of a spool that is reeled up and down on a string by motions of the hand; [N. Amer] A stupid incompetent person; Something that fluctuates up and down or between extremes