Mrunal’s Win22 Series Economy Updates: Pillar1B1 to 1C

IF Attended Mrunal’s Full (Paid) Course 👇👇

Not Between Between From
Between
joined Oct-2020 Oct-2021 Feb-
Between Jul-2021
Type of Un- Before to Feb- to Feb- Week4-
Jun-2019 to Oct-
Student academy May- 2021 Week1 2022
to Oct- 2021
Paid 2019 (Code: 2022 onwards
2020 (Code:
Course PCB2, (Code: (Code:
PCB4)
PCB3) PCB5) PCB6)
Shd see
Win20CSP? ✅ ✋ No ✋ No ✋ No ✋ No ✋ No
✅ Yes
Covers updates Yes Need Need Need Need Need
for UPSC-2020
Shd see
Win21CSP? ✅ ✋ No ✋ No ✋ No
✅ Yes ✅ Yes ✅ Yes
Covers updates Yes Need Need Need
for UPSC-2021
Shd see
Win22CSP ✅ ✋ No
✅ Yes ✅ Yes ✅ Yes ✅ Yes ✅ Yes
Covers updates Yes Need
for UPSC-2022
Contents

12 Pillar1B1: 🤑🤑 Bank-NBFC Classification ............................................................................................ 37

12.1 What is already covered in Past: 1B1-Classification of Bank-NBFC ................................... 37
12.1.1 Win20: already covered Following in 1B1 .......................................................................... 37
12.1.2 Win21: already covered Following in 1B1 .......................................................................... 37
12.2 🏦🏦 RBI Governor gets re-appointment .................................................................................. 37
12.3 🏦🏦 � Bank Classification: New Developments ...................................................................... 38
12.3.1 Scheduled Banks Status to Airtel, Paytm ............................................................................. 38
12.3.2 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021) ............... 38
12.3.3 🏦🏦 PMC Scam resolution (2021-22) ................................................................................... 39
12.4 🏦🏦 � NBFC Classification: New Types- BNPL, P2P ............................................................. 39
13 Pillar 1B-2: BURNING ISSUES IN BANKING-FINANCE .............................................................. 40
13.1 What is already covered in Past: 1B-2: Burning Issues in Banking-Finance ...................... 40
13.1.1 Win20: already covered Following in 1B2 .......................................................................... 40
13.1.2 Win21: already covered Following in 1B2 .......................................................................... 40
13.1.3 📙📙📙📙ES22 observations on NPA ......................................................................................... 41

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 35
 13.1.4 ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (पद� के पीछे ज�ी से के स सुलटा लेते है!) ............................................. 41
13.1.5 (⚖🔪🔪🔪🔪)🈶🈶🈶🈶 Cross-border Insolvency (सीमा-पार का िदवा�लयापन)............................. 43
13.2 (⚖🔪🔪🔪🔪) Voluntary Liquidation of Companies ............................................................... 44
13.2.1 (⚖🔪🔪🔪🔪) : 😥😥 Challenges in voluntary liquidation (चुनौ�तयाँ): ..................................... 44
13.3 🕵🕵�(🏦🏦 🔪🔪🔪🔪): 🧬🧬 Bad Bank Structure ............................................................................. 45
13.3.1 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🗃🗃 functioning ........................................................................ 46
13.3.2 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: Benefits & Challenges? ......................................................... 47
13.3.3 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: ✍Conclusion (�न�षर्)............................................................ 47
13.4 🏦🏦 💸💸💸💸 DICGC (Amendment) Bill 2021 .......................................................................... 47
13.4.1 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� RBI’s Prompt Corrective Action (PCA) for NBFCs .................... 48
13.4.2 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules
48
13.4.3 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA ................................................ 49
13.4.4 📞📞Financial Messaging Systems: SWIFT- Russia gets banned .................................. 49
14 Pillar1C: Share market ............................................................................................................................ 50
14.1 What is already covered in Past: Pillar#1-C: SEBI-Share Market ........................................ 50
14.1.1 Win20: already covered Following in 1C ............................................................................ 50
14.1.2 Win21: already covered Following in 1C ............................................................................ 50
14.2 🔪🔪🔪🔪⏰Debt → Short Term → Factoring & TREDS ..................................................... 51
14.2.1 🔪🔪🔪🔪⏰Factoring Regulation (Amendment) Act, 2021............................................... 51
14.2.2 🔪🔪🔪🔪⏰: 📡📡 TReDS platform to connect factoring-players. ....................................... 52
14.2.3 🔪🔪🗃🗃 Bonds in News: 🚦🚦🚦🚦 Surety Bonds ........................................................................ 52
14.2.4 🔪🔪🗃🗃Bonds in News: Misc.................................................................................................... 52
14.3 🗃🗃🗃🗃Securities and Exchange Board of India (SEBI) ............................................................ 52
14.3.1 T+1 Settlement instead of T+2.............................................................................................. 53
14.3.2 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading: RBI's NDS-OM, OTC .......................................... 54
14.3.3 🐮🐮🐮🐮Stockmarket IPO Bubble Burst: Case of Paytm (फू ट गया ग़ु�ारा, �नकल गयी हवा) ......... 55
14.3.4 🐮🐮🐮🐮MSCI Emerging Market (EM) index ...................................................................... 56
14.4 �📡📡MRUNAL’S ECONOMY COURSE FOR UPSC PRELIMS & MAINS .................. 56
14.4.1 Mock Questions for Prelims ............................................................................................ 57
14.4.2 ✍🏻🏻🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words) ........................ 57

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 36
12 PILLAR1B1: 🤑🤑 BANK-NBFC CLASSIFICATION

12.1 WHAT IS ALREADY COVERED IN PAST: 1B1-CLASSIFICATION OF BANK-NBFC

�न� चीज़� हम पहले ही पढ़ चुके ह�. आपने नहीं पढ़ा तो उसम� से देख लेना

12.1.1 Win20: already covered Following in 1B1👇👇

⇒ 🤩🤩 Golden Anniversary of nationalization- ES20
⇒ 🦄🦄> 🦁🦁: Private sector banks are better than PSBs
⇒ 🦁🦁 = 🐌🐌 PSBs: reasons for inefficiency & remedies?
⇒ Merger of 10 PSBs into 4 (Announced in 2019-August)
⇒ 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 On-Tap Licenses for SFB
⇒ 📮📮 (Yearbook) Dept of Post: POSB vs IPPB
⇒ 🏦🏦 �Cooperative Banks: Kerala Bank (2019)
⇒ 🏦🏦 �AIFI: NHB’s regulatory power shifted to RBI
⇒ 🏦🏦🏦NBFC → Investment and Credit Companies (new category in 2019)
⇒ 🏦🏦🏦 Microfinance → Lending norms changed in 2019-Oct

12.1.2 Win21: already covered Following in 1B1👇👇

⇒ 🏦🏦 � 🔂🔂Consolidation of PSBs [एकत्रीकरण]
⇒ PSB Privatization: Banking Investment Company (BIC-ब�िकंग �नवेश कं पनी)
⇒ 🤵🤵 LVB merged with DBS (�वलीनीकरण)
⇒ 🚫🚫🚫🚫 � 🚗🚗🚗🚗 Allowing NBFC/Large Corporate to setup Banks
⇒ ⚖🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯Banking Regulation (Amendment) Ordinance/Act, 2020
⇒ 🚫🚫🚫🚫🚫 Formal FI: Non-Banking Financial Institutions
⇒ DFI → NaBFID: National Bank for Financing Infrastructure and Development
⇒ 👹👹(🚫🚫🚫🚫) NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली)
⇒ 👻👻 ATMANIRBHAR → 🐯🐯: 👹👹(🚫🚫🚫🚫) RBI Helping NBFCs
⇒ 👻👻 ATMANI → 🧔🧔🧔🧔🧔🧔🧔🧔 Partial Credit Guarantee Scheme (PCGS) 2.0
⇒ 👻👻 ATMANI → 🧔🧔🧔🧔🧔🧔🧔🧔 Special Liquidity Scheme for NBFC/HFC (खास तरलता योजना)
⇒ 👻👻 ATMANI → 🧔🧔🔪🔪🔪🔪🔪🔪 Credit Guarantee Enhancement Corporation
⇒ 🐯🐯: 👹👹(🚫🚫🚫🚫) FI → NBFC: RBI’s 4 tier regulation structure (Proposed)

12.2 🏦🏦 RBI GOVERNOR GETS RE-APPOINTMENT

⇒ RBI Governor selected by Financial sector regulatory appointment search committee (FSRASC)
headed by the Cabinet Secretary (IAS) → successful candidates’ names sent to Appointments
Committee of the Cabinet headed by the Prime Minister for final approval.
⇒ Governor and Dy.Govs’ tenure usually (not always) 3 years. Re-appointment is possible. कायर्काल

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 37
⇒ 2018-Dec: 25th Governor: Shaktikanta Das (Retd. IAS, Former finance secretary, Member of 15th
Finance Commission). He replaced Urjit Patel in 2018-Dec.
⇒ 2021: Modi Govt renewed his tenure for three more years till Dec- 2024, thus giving him a total
tenure of six years (�रज़वर् ब�क के गवनर्र के �प म� पुनः �नयु��)

12.3 🏦🏦 � BANK CLASSIFICATION: NEW DEVELOPMENTS

12.3.1 Scheduled Banks Status to Airtel, Paytm

Airtel Payments Bank and Paytm Payment Bank categorised as a scheduled bank in 2021-22.

🚩🚩🚩FAQ: “After getting scheduled status, Can Payment Banks give loans/credit cards or accept
Fixed Deposits?” Ans. No, they’re prohibited from such activities. Paytm doing such activities as “an
Agent” of a federal bank, IndusIndia bank etc but Paytm cannot do it as ‘its own Banking business’.

12.3.2 🏦🏦 � 🌎🌎🌎🌎🌎🌎🌎🌎 Unity Small Finance Bank (SFB) gets license (2021)
⇒ 2021: RBI approved Unity Small Finance Bank, under ‘On-Tap’ licensing system.
⇒ Unity Small Finance Bank shareholding/Ownership: 50:50 between 1) Centrum Finance 2) BharatPe
⇒ Unity-SFB has acquired scam-walli PMC cooperative bank. (= PMC’s depositors, staff, buildings, assets
etc). (से�म� ग्रुप पीएमसी ब�क का अ�धग्रहण िकया है)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 38
12.3.3 🏦🏦 🤕🤕🤝🤝🤵🤵PMC Scam resolution (2021-22)
⇒ Scam-hit Punjab and Maharashtra Cooperative Bank Ltd (PMC Bank) aquired by / merged with
Unity Small Finance Bank Ltd. (USFBL). (एक�करण /�वलीनीकरण)
⇒ PMC bank’s victim depositors will get ₹5 lakh from DICGC. After that, if any remaining due
amount → Victim depositors to get it from USFBL bank in instalments in next 10 years.

12.4 🏦🏦 � NBFC CLASSIFICATION: NEW TYPES- BNPL, P2P

Consumer Durable - Help buying TV, Fridge, Mobile, AC etc. with Buy now Pay later
Loan Finance /BNPL (BNPL) / Equated Monthly Instalment (EMI) model. (How they’re
similar or different = PHD not required. हर चीज़ का �विकपीिडया बनना ज�री
⚖🐯🐯Regulator: नहीं है पुराने पेपर देख लो)
RBI - Eg. Bajaj Finserv, Flexpay, Zestpay etc.
Fintech cos: P2P - It is like Olx-Quickr connecting sellers of second hand goods with
Lenders buyers. the P2P lending websites connect borrowers and lenders.
- E.g. Faircent.com, Cashkumar.com, CRED Mint etc.
⚖🐯🐯Regulator: - 2021- CRED Mint launched. Newspapers gone crazy with
RBI PR/Publicity-articles so Babushonas are demanding that I should
teach them PHD thesis on its business model. ✋Bhai, I’ll not teach it.
Look @previous exam MCQs .

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 39
13 PILLAR 1B-2: BURNING ISSUES IN BANKING-FINANCE

13.1 WHAT IS ALREADY COVERED IN PAST: 1B-2: BURNING ISSUES IN BANKING-FINANCE

�न� चीज़� हम पहले ही पढ़ चुके ह�. आपने नहीं पढ़ा तो उसम� से देख लेना

13.1.1 Win20: already covered Following in 1B2👇👇

⇒ 🏦🏦 �😥😥 Cooperative Banks: Negative News (2019): PMC Bank
⇒ 🏦🏦🏦🏦🏦🏦Yes Bank and AT1 Bonds (2020)
⇒ Equity Capital + Liabilities + NET Profit = Assets
⇒ 🌐🌐🌐🌐 🕵🕵 BASEL-III norms: Capital Tiers
⇒ 🔪🔪🔪🔪🔪Additional Tier 1 (AT1) Bonds
⇒ 👻👻(🚫🚫🚫🚫): NBFC: Shadow Banking (आभासी / प्र�तछाया ब�िकंग प्रणाली)
⇒ 😥😥 ⛱ NBFC-Negative News (2019): Thomas Cook NBFC closure in UK
⇒ 🔪🔪🔪🔪 NPA: Data from ES20
⇒ ⚖🔪🔪 IBC Amendments
⇒ ⚖🔪🔪 Insolvency and Bankruptcy Code Amendment (2018: सं िहता सं शोधन)
⇒ ⚖🔪🔪🔪🔪 IBC Code (first) Amendment Act (2019: सं िहता सं शोधन)
⇒ ⚖🔪🔪🔪🔪 IBC Code (second) Amendment Bill 2019)
⇒ 🈶🈶🈶🈶🈶🈶🈶🈶 Cross-border Insolvency (सीमा-पार का िदवा�लयापन)
⇒ 🔪🔪🔪NPA: relief given to MSMEs in 2019
⇒ 🔪🔪🔪🔪RBI’s ‘Feb-12’ Circular (2018) & Prudential Framework (2019)
⇒ 🔪🔪🔪🔪 📘📘 Economic Survey on NPA (आ�थक सव��ण)
⇒ 🔪🔪🔪🔪 📘📘 Economic Survey 2018-19 on NPA (released in 2019-July)
⇒ 🔪🔪Economic Survey 2020 on NPA (released in 2020-Jan-31st)
⇒ 🔪🔪🔪🔪🔪🔪ES20: Use AI-ML Technology
⇒ 🔪🔪🔪🔪🔪🔪ES20: setup PSBN Network
⇒ �PSB Banking Personnel Reforms→ ES20 Vol1Ch7 (50 years anni.)
⇒ 🕵🕵🏻🏻💸💸💸💸💸 �
� � DICGCI: depositor’s insurance hiked by Budget-2020
⇒ 🐯🐯🐯🦁🦁 RBI’s Bimal Jalan panel (2018-Nov)
⇒ RBI’s Financial / Accounting Year (�व�ीय वषर् म� बदलाव)

13.1.2 Win21: already covered Following in 1B2👇👇

⇒ 👻👻👻👻👻👻✋ ATMANIRABHAR → Loan/EMI/NPA relief / Moratorium
⇒ 🐯🐯🐯🐯🐯🐯✋Loan Moratorium: how it benefits borrower (उधारकतार् को फायदा)
⇒ 👻👻👻👻:🤧🤧🤧🤧✋ Loan Moratorium: Interest Relief Scheme (बकाया �ाज के ऊपर चढ़ने वाले �ाज पर
�रयायत)
⇒ 🦁🦁 🔪🔪RBI’s KV Kamath Report Resolution Framework for Covid19-related Stress

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 40
⇒ 👻👻� (⚖🔪🔪🔪🔪) ATMANI → IBC Ordinance/Act 2020 to suspend new cases
⇒ ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (Proposed, yet to implement)
⇒ ⚖🔪🔪🔪🔪: 🥱🥱 IBBI directive on Avoidance Transaction and 500 other technical things
⇒ 🤒🤒🤒 💊💊 📅📅: ES21: Regulatory Forbearance (�व�नयामक� �मा/सहनशीलता)
⇒ 🤒🤒🤒 💊💊 📅📅 Regulatory forbearance: side-effects by prolonged use (लं बे समय तक उपयोग से हा�नयां)
⇒ 🤒🤒🤒 💊💊 📅📅 Regulatory forbearance: Policy Lesson for Post-Corona Recovery (नी�त पाठ?)
⇒ �(🏦🏦 🔪🔪🔪🔪) A Bad Bank called “PARA”- Suggested by ES17
⇒ �(🏦🏦 🔪🔪🔪🔪) Bad Bank called ARC/AMC- Announced by Budget-2021
⇒ 🐯🐯🐯🐯: BASEL Norms deferred in Corona
⇒ 🐯🐯🐯🐯🐯🐯 BASEL Norms: RBI deferred some norms
⇒ 🌐🌐🌐🌐🌐🌐 BASEL Norms: Switzerland’s body deferred some norms
⇒ 🌐🌐🌐💸💸 Recapitalization of PSBs: [सावर्ज�नक �ेत्र के ब�को का पुन:पूंजीकरण]
⇒ 🔪🔪🗃🗃🗃🗃🗃🗃🗃♂Zero Coupon Bonds for PSB recapitalization
⇒ �PSB Reforms: Enhanced Access and Service Excellence (EASE) 3.0

13.1.3 📙📙📙📙ES22 observations on NPA

If loan principal or interest is not paid for more than 90 days from its due date, then such loan
account is classified as Non-Performing Asset (NPA). िक� जमा करने क� �नयत �त�थ/तारीख के ऊपर भी 90 िदनों से
अ�धक हो चुके हो िक�ु िक� जमा नहीं क� गयी तो उसे अनजर्क प�रसं प��यां/गैर-�न�ािदत प�रसं प��यां कहेते है।

- NPA as a % of total loans : declined from 11% (2017) to 7% (2021-Sept)

- Public Sector Banks (PSBs): 2016-2020= losses . 2020-June onwards= profits.

13.1.4 ⚖🔪🔪🔪🔪:🤫🤫 IBC Pre-Packs (पद� के पीछे ज�ी से के स सुलटा लेते है!)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 41
⇒ PRE-pack System is found in United Kingdom and the United States
⇒ IBC 2021 Ordinance (and later Amendment Bill) aim to enable this in India for MSMEs.
Corporate Insolvency Pre-packaged Insolvency Resolution Process (PIRP)
Resolution Process (CIRP)
IBC's Formal process: lenders ⇒ Pre-packaging = Borrower company informally
file complaint to NCLT → (discreetly) negotiates a resolution plan with its lenders /
Insolvency professional buyer-parties who may be interested in its action, before
appointed → Loan approaching IBC/NCLT process. (प्री पैिकंग = �व�धवत �प से
restructuring proposal → If कोटर्/कानूनी प्रिक्रया शु� होने से पहले ही अनौपचा�रक �प से कजर्दार कं पनी
NOT approved by lenders → अपने कजर्दाता तथा भ�व� क� नीलामी म� ��च रखने वाले खरीदारों से पद� के
Auctioning. (औपचा�रक प्रिक्रया कु छ पीछे /बं द दरवाजे म� चुपचाप समझौता कर कर ले.)
इस तरह से होती है) ⇒ e.g. Anil proposes, “I’m unable to repay loan but I’m
getting new partner/investor Mahindra. Together we’ll
revive the biz & repay 80% loan.”
⇒ If this is agreeable to lenders, they’ll send letter to NCLT,
“We’ve internally agreed for this plan. Plz give judicial
approval to it.”

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 42
 Corporate Insolvency
Resolution Process (CIRP)
If Resolution Plan not
aggregable to Lenders then
Public Auction / Open Auction
Conducted.
(सावर्ज�नक �प से नीलामी होती)
Time limit: upto 330 days =
slower
More number of days = more
negative headlines in newspaper
= ⏬confidence of customers &
investors (e.g. Customer may
not buy Videocon refrigerator, if
he continuously sees negative
news & starts to fear that
company will shut down, he’ll
not get warranty/repair service
after 3-5 years)
CIRP applicable to all small and Only available to micro, small and medium enterprises
big enterprises.
Pre-packaged Insolvency Resolution Process (PIRP)
Public auction not conducted but Swiss Challenge allowed.
What is the meaning of this word? Ans. Explained in Video
Lecture.
Time limit = 120 days = faster than CIRP (ज� �नपटान)
⇒ 🤩🤩Benefit? a quick (speedy) and discreet (confidential)
way of completing the insolvency resolution process. ��रत
और गु� �प से मसले को समेट �लया जाए
⇒ 🤩🤩Prevents the stigma/bad publicity/damage to brand
image associated with formal IBC proceedings. else in
future difficult to get investors/customers/clients. मामला
औपचा�रक �प से कोटर् तक नहीं प�ंचेगा= अखबारों म�/जनमानस म� कं पनी
बदनाम/कलं िकत ना हो वरना भ�व� म� �नवेशकों/ग्राहकों को आक�षत करना
मु��ल हो जाता है.
⇒ least disruptive to the businesses. Cost-effective. Helps in
workers’ job preservation (compared to a scenario where
company is shut down)
(MSMEs) as per 2021’s IBC Ordinance / Amendment Bill.
(के वल चु�नंदा श्रेणी के �लए है)

13.1.5 (⚖🔪🔪🔪🔪)🈶🈶🈶🈶 Cross-border Insolvency (सीमा-पार का �दवा�लयापन)

⇒ Cross-border insolvency has two facets: [1) foreign creditors should be able to recover money
lent to Indian corporates & VICE VERSA. [2) During Indian company's insolvency in India, the

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 43
 Indian lenders should be able to recover money from Indian company's foreign assets easily,
AND VICE VERSA.
⇒ IBC sections 234 & 235 have provisions for it, BUT they are not notified yet, so they are not
enforced.
⇒ This leads to uncertainty of outcomes for creditors and debtors.
2018: Corporate Affairs Ministry's Insolvency Law (reforms) Committee under Injeti Srinivas
recommended

⇒ We should create a separate law for Cross-border Insolvency. अलग से कानून बने
⇒ More than 40 nations use United Nations Commission on International Trade Law
(UNCITRAL)'s Model Law of Cross Border Insolvency (1997) So, we can use it as a template
while making our own law → 📙📙📙📙ES22 also recommended the same.
⇒ 👜👜👜👜Budget-2022: - We will amend IBC Code to facilitate cross border insolvency resolution.

13.2 (⚖🔪🔪🔪🔪)👋👋👋👋 VOLUNTARY LIQUIDATION OF COMPANIES

Liquidation is the process of shutting down a company. There are two type (प�रसमापन- दो िक़�)

 1) �Involuntary Liquidation: Due to loan default → it can be conducted either through I) IBC
code or II) SARFAESI Act depending on the case. (अनै��क प�रसमापन- जब कं पनी िदवा�लयापन िदखा दे)
 2) �Voluntary Liquidation: when the owner has not committed any loan default but wants to
shut down the business. Voluntary liquidation can be done through A) sending application to
the registrar of companies under Companies Act, 2013 B) sending application under the
insolvency bankruptcy code. However Method-A is more popular than B at present. (�ै��क
प�रसमापन. कं पनी ने अभी तक कज़र् म� िदवा�लयापन नहीं िदखाया लेिकन उसके धं धे/�ापार म� अ�ा भ�व� निह िदख रहा इस�लए
क�नी का मा�लक ख़ुद क� कं पनी �यं बं द करना चाहता है.)

13.2.1 (⚖🔪🔪🔪🔪)👋👋👋👋 : 😥😥 Challenges in voluntary liquidation (चुनौ�तयाँ):

Owner of the company needs to get no objection certificate (NoC) from various org such as CBDT &
CBIC (More about them in Pillar#2), EPFO & ESIC (More about them in Pillar#1D2)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 44
- 😰😰But, there are no well-defined Standard Operating Procedures (SoPs) / timelimits in the Govt
organisations for granting NOC. This results in delays / demand for bribes / harassment of the
owner.
- 📙📙📙📙ES22 suggested simplify the procedure, give clarity in rules, setup an online portal that
combines all the steps at one place.
- 👜👜👜👜Budget-2022: we’ll setup a Centre for Processing Accelerated Corporate Exit (C-PACE)-
to faster voluntary liquidation / winding-up of the companies. Presently, this process takes
nearly 2 years → we will reduce it to just six months. .
(वै��क प�रसमापन से पहेले कं पनी के मा�लक ने आयकर, ईपीएफऑ जेसी �व�भ� सरकारी सं �ाओं से अनाप�� प्रमाण पत्र-एनओसी
हा�सल करना होता है, िक�ु एनऑसी क� समयाव�ध क� ��ता क� कमी के चलते उद्योगप�त उ�ीड़न/�र�तख़ोरी का �शकार बनाता है।
इस�लए आ�थक सव��ण ने इन �नयम-कानूनों म� ��ता, एक ऑनलाइन पोटर्ल क� ज़�रत जतायी थी. नए बजट म� इस वा�े ’सी-पेस’
नामक एक नई सं �ा बनाने क� घोषणा क� गई।)

13.3 🕵🕵�(🏦🏦 🔪🔪🔪🔪): 🧬🧬 BAD BANK STRUCTURE

NARCL-ARC (founded in 2021) IDRCL-AMC (founded in 2021)

Type Asset Reconstruction Company (ARC)
प�रसं प�� पुनगर्ठन कं पनी
Full Form National Asset Reconstruction Company
Limited (NARCL)
Type Registered company under companies
act. (So not a statutory/constitutional
body)
Given license by RBI for ARC.
Function To purchase bad loan assets from banks.
(यह ब�कों से अनजर्क प�रस���यां ख़रीदेगा)
Asset Management Company
(AMC)
प�रसं प�� प्रबं धन कं पनी
India Debt Resolution Company Ltd.
(IDRCL) =
Registered company under
companies Act. (कं पनी क़ानून म� पं जीकृ त
कं प�नयां है. ये कोई वैधा�नक या सं वैधा�नक सं �ाएं
नहीं है)^^
To manage/value addition/ auction
those bad loan assets which were
purchased by NARCL. (e.g. factory,

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 45
 NARCL-ARC (founded in 2021) IDRCL-AMC (founded in 2021)
airplanes, bulldozer). (ख़रीदी �ई सं प��यों
का प्रबं धन, मू� वधर्न, नीलामी करेगा)
Ownership/ ⇒ 51% PSBs like SBI, BoB, PNB** ⇒ 49% (Public Sector Banks,
Shareholding ⇒ 49% by Pvt banks and NBFCs# NBFCs)
⇒ 51% (private sector bank,
NBFCs).#
Tenure This organization will exist for five years. Same as left cell
** NARCL Ownership 51% shareholding/ownership among 8 public sector banks (PSB) viz. SBI
(13.17%), Punjab National Bank (12%), Bank of Baroda, Canara Bank, Bank of Maharashtra, Union
Bank of India, Indian Bank, Bank of India. (Note: Future Some of these PSBs may get merged so the
% may change.)
🚩🚩🚩FAQs:
⇒ #what are their names? Ans. Not explicitly mentioned in Pressnote. #🕰🕰थोड़ा-पढ़ो-आगे-बढ़ो
⇒ ^^
AMC got license from RBI or SEBI? Ans. Same as above
⇒ Bad Bank means “ONLY NARCL” or (NARCL+IDRCL) Ans. Same as above. But from how
📙📙📙📙ES17 had given the vision of Bad bank, it should be the combined work of
(NARCL+IDRCL)= Bad Bank.

13.3.1 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🗃🗃 functioning

बैड ब�क नीलामी म� ब�कों क� अनजर्क प�रसं प��यां ख़रीदेगा, और वह भुगतान क� रक़म: 15%मुद्रा और 85% सुर�ा रसीदों के �प म� ब�कर
को चुकाएगा। ऐसी Rs.30,600 cr करोड़ क� सुर�ा रसीदों के पीछे भारत सरकार ने अपनी सं प्रभु गारंटी अगले पाँच वष� के �लए दी है।

⇒ Suppose Axis Bank has a bad loan account worth ₹200. Axis may conduct an (Swiss Challenge)
Auction. Bad Bank offers ₹100, Anil Ambani’s ARC offers ₹95, Mahindra offers ₹92.
⇒ Then Axis will sell to Bad Bank for ₹100 (because its the highest bidder)
⇒ BadBank will pay Axis ₹100= Partially in currency (₹15) + partially in Security receipts (SR
worth ₹85).
⇒ Security receipts (SR) is a piece of paper issued by BadBank promising to pay the remaining
dues/amount (₹85) to banker in 5 years.
⇒ Security receipts (SR) is a legally valid instrument under the Sarfaesi Act.
⇒ If the Axis banker very urgently requiring money then he may resell the SR at discount (e.g. at
₹80) to another Bank, Insurance/Pension Company, AIFI (e.g. SIDBI, NABARD) etc.
⇒ Then those new SR-holders will receive the money (₹85) from Bad Bank in future.
⇒ IF Bad Bank faces problems in honoring the SR payment deadlines→ then, Union Govt has
given sovereign guarantee of Rs.30,600 cr to Security Receipts (SR). This sovereign guarantee
valid for 5 years.

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 46
13.3.2 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: 🤩🤩😰😰 Benefits & Challenges?
⇒ 😍😍 Faster resolution of large sized NPA. (तेज �नपटान)
⇒ 😍😍 Individual Bank’s Bad loan size⬇ = BASEL-III Capital requirement ⬇ (ब�को क� अनजर्क
प�रसं प��यां कम होगी तो उ�ोंने बासेल मानदंड के �लए कम पूंजी प्रावधान करना होगा)
⇒ Further benefits = RE-Paste the points given in Intro & Conclusion. (प�रचय और �न�षर् म� जो मुददे �लखे
ह� उसक� वापस पीपूड़ी बजाओ)
⇒ 😥😥Ultimately the losses caused by Vijay Mallyas are paid by depositors/investors (of the
Banks/NBFCs who own NARCL & IDRCL) and Taxpayers (using whose money Govt’s is giving
sovereign guarantee to Security receipts). (अंत म� तो परो� �प से इस नुकसान क� भरपाई जमाकतार् �नवेशक और
करदाताओं द्वारा ही हो रही है)

13.3.3 �(🏦🏦 🔪🔪🔪🔪) Bad Bank: ✍Conclusion (�न�षर्)

NARCL aims to resolve stressed loan accounts above ₹500 crore each. Total about ₹ 2 lakh crore
stuck in such loan accounts. Thus, individual banks will be relieved from not having to waste time
haggling with NPA-borrower. Bankers will be able to focus energy on business expansion, financial
inclusion. Thus, Govt taken an appreciable step, it will help in a long way in re-invigorating Indian
banking sector. (दो लाख करोड़ क� अनजर्क-प�रसं प��यों का �नपटान होगा। ब�कर अपनी समय और ऊजार् पुराने बकायदारों से लोन
पुनगर्ठन क� माथाप�ी करने क� जगह, अपने ब�क के �ापार �व�ारण तथा �व�ीय समावेशन म� लगा पाएगा। सरकार ने प्रशं सनीय क़दम
उठाया है, �जससे भारतीय ब�िकंग �ेत्र म� नवऊजार् का सं चार होगा.)

13.4 🏦🏦 💸💸💸💸 DICGC (AMENDMENT) BILL 2021

⇒ 💼💼Budget-2020: announced ⏫the insurance coverage to ₹ 5 lakhs (नुकसान भरपाई क� रा�श म� बढ़ोतरी)
⇒ 2021: Govt introduces Deposit Insurance & Credit Guarantee Corporation (Amendment) Bill →
😰😰BEFORE (सुधार/सं शोधन �वधेयक से पहले) 🤩🤩AFTER REFORM (सुधार प�ात)
Upto ₹1 lakh deposit insured Protection increased upto Rs 5 lakh
When will depositors get back above amount? When RBI imposes (withdrawal) moratorium
No clear timelines. Often they had to wait for on a weak bank → within 90 days of that event,
many years (पैसा/मुआवजा कब आएगा उसक� समय सीमा DICGC will pay depositors. (�रज़वर् ब�क जब कमजोर
तय नहीं थी) ब�क म� से ग्राहकों के पैसे उठाने पर रोक लगाए उसके 90 िदनों के
भीतर ही मुआवजा �मल जाएगा)
Banks had to pay premium/fees to DICGC at DICGC can ⏫increase the premium fees to
the rate of ₹10 paise to insure every ₹100 worth ₹12-₹15 paise (i.e. 20%-50% more than the

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 47
 😰😰BEFORE (सुधार/सं शोधन �वधेयक से पहले)
of deposits. (ब�को ने हर ₹100 के िडपॉ�जट का बीमे के �लए
10 पैसे क� बीमा िक�/फ�स देनी होती थी)
All types of Banks covered
But NBFCs not covered.
🤩🤩AFTER REFORM (सुधार प�ात)
original fees) ✋Exact figures NOTIMP. (बीमा
िक� म� बढ़ोतरी क� गई)
Same as left cell. (सभी प्रकार के ब�क के ग्राहकों को सुर��त
करता है, िकंतु ग़ैर ब�क �व�ीय सं �ान के ग्राहकों को सुर��त नहीं
करता.)

13.4.1 🐯🐯🐯🐯🐯🐯🐯🐯🐯🐯� RBI’s Prompt Corrective Action (PCA) for NBFCs

Figure 1: need not loose too much sleep, unless preparing for RBI officers' exam

⇒ from 1/10/2022- RBI to monitor NBFCs under PCA framework (ग़ैर ब�क �व�ीय कं पनीयो के लीए ��रत
सुधारा�क कारर्वाई)
⇒ using 3 indicators/parameters: - 1) Non-Performing Assets, - 2) BASEL-capital adequacy ratio -
3) BASEL- Tier 1 capital. (What do they mean? NOTIMP। इन पैमानो पर �नगरानी)
⇒ Accordingly, RBI to classify the NBFCs in risk category#1-2-3. (जो�खम के िहसाब से वग�करण)
⇒ Higher risk → higher restrictions e.g. ✋1) restriction on branch expansion ✋2) halt on
dividend distribution, ✋3) promoters will be asked to infuse capital in NBFC etc. etc (सं �ाम�
�जतना �ादा जो�खम → तो उतनी �ादा पाबं िदया �रज़वर् ब�क उसपे डालेगी)
⇒ Above PCA-norms applicable on ✅ deposit-taking-NBFCs (e.g BajajFinServ).
⇒ But ✋Not Applicable on govt owned NBFCs (e.g UTI Mutual Fund), primary dealers, housing
finance companies (HFC), non-deposit taking NBFCs (e.g. ILFS).

13.4.2 🐯🐯: 🦋🦋Regulations Review Authority (RRA 2.0)- for Ease of implementing RBI rules
- RBI has setup RRA 1.0 (in 1999, for one year) and RRA 2.0 (in 2021, for one year)
- Chairman: RBI’s Dy. Governor M Rajeshwar Rao. Who are other members? NOTIMP.
- Objective: To give suggestions to RBI to simplify its rules/regulations so Bank/NBFCs have ease
of doing business. (�नयं त्रण समी�ा प्रा�धकरण जो िक �रज़वर् ब�क को सुझाव देगा िक कै से �रज़वर् ब�क के �नयमों म� सरलीकरण
िकया जाए तािक उनके अनुपालन मे ब�क और एनबीफ़सी को आसानी रहे।)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 48
13.4.3 �👮👮:🛡🛡Staff Accountability Framework for PSB-NPA
⇒ Finance Ministry’s issued this for NPA accounts up to Rs 50 crore in PSBs from 1/4/2022.
⇒ If PSB Banker took bonafide business decisions to approve loan application but it turned NPA
then banker will be protected from undue inquiries/harassment by 3Cs — CBI (Central Bureau
of Investigation), CVC (Central Vigilance Commission) and CAG (Comptroller and Auditor
General).
⇒ Previously the fear of 3C was discouraging the public sector bank managers from sanctioning big
loans (in the aftermath of TBS, Mallya, Nirav Modi).
(सरकारी ब�क और लोन पास करने से डरते ह� �ोंिक उ�� तो CBI, CVC, CAG क� कारर् वाई का डर लगता है तो अब �वत् मं त्रालय ने
कु छ नए “सावर्ज�नक ब�क कम� जवाबदेही ढांचा” िदशा�नद�श जारी िकए ह� तािक ईमानदारी से �लए गए फै सलों म� अगर लोन का पैसा वापस
न आए तो सरकारी ब�क के ईमानदार ब�कर पर अनाव�क �प से कोई कारर् वाई न हो)

13.4.4 💸💸📞📞Financial Messaging Systems: SWIFT- Russia gets banned

Globally (वै��क �र पे पैसा भेजना हो) Within India (भारत के भीतर ही पैसा भेजना हो!)
Society for Worldwide Interbank Structured Financial Messaging System (SFMS)
financial telecommunication (SWIFT)
By a Cooperative organization in designed by Tata Consultancy Services (TCS) for
Belgium’s La Hulpe city (1973). IDRBT (=Research arm of RBI)
To serve the messaging function for to serve the messaging function in NEFT, RTGS, and
Banks, NBFCs & brokers who may / may other inter-bank, intra-bank e-transactions
not have direct bank relations / platforms within India.
settlement systems with each other due to
international borders.
😥😥 Nations banned from SWIFT: 1) Iran (Capital Tehran) 2) 2022: Russia got ban, after invading
Ukraine. This will make it very difficult for the Russian banks/ NBFCs /businessmen to send and
receive money internationally (यूक्रेन-आक्रमण के �ख़लाफ़ �स को ��फ़्ट-�व�ीय सं देश प्रणाली से प्र�तबं �धत िकया गया है
�जसके चलते �सी ब�क �व�ीय सं �ान और उद्योगप�तयों को अंतररा��ीय �र पर पैसों के लेन म� िद�त� आएं गी।)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 49
14 PILLAR1C: SHARE MARKET

14.1 WHAT IS ALREADY COVERED IN PAST: PILLAR#1-C: SEBI-SHARE MARKET

14.1.1 Win20: already covered Following in 1C👇👇

⇒ 🔪🔪🔪🔪⏰ Debt Instruments: Short Term (लघु अव�ध ऋण उपकरण )
⇒ 🔪🔪🔪🔪🔪🔪 Debt Instruments: Long Term (िदधर् अव�ध ऋण उपकरण )
⇒ ⚖🗃🗃 Shares / Equity Finance / IPO
⇒ 🌬🌬🌬🌬:�⚖� Force Majeure (अभेद्य श��)
⇒ Share market: misc. Terms
⇒ 🗃🗃🗃🗃 ISIN Number
⇒ 🗃🗃🗃🗃🏻🏻🏻♀IOSCO
⇒ 🔗🔗🥏🥏 Initial Coin Offering (ICO)
⇒ Investment Instruments/Funds
⇒ 📦📦 � � Sovereign Wealth Fund (SWF: सं प्रभु धन कोष)
⇒ (🦁🦁🦁🦁)📦📦: (🏛🏛🏛🏛🏛🏛) Bharat Bond (Debt) ETF (2019-Dec)
⇒ (🦁🦁🦁🦁):(🏗🏗🏗🏗) Govt’s AIF for Real Estate Sector (2019)
⇒ �👬👬 Corporate Governance (कॉप�रेट शासन)

14.1.2 Win21: already covered Following in 1C👇👇

⇒ 🔪🔪🔪🔪⏰Debt → Interest Rate Benchmarks: LIBOR, MIBOR, MIFOR, SOFR
⇒ 🔪🔪🔪🔪⏰: 🐯🐯🐯🐯 🧔🧔🧔 Short term debt instruments → by Govt → WMA
⇒ 🐯🐯🐯🐯🐯 Consolidated Sinking Fund (CSF) for State Govts’ repayment
⇒ 🔪🔪🔪🔪🔪🔪 Long Term Debt Instruments: Other Special purpose Bonds
⇒ ⚖🗃🗃 Financial Instruments: Equities / Share Market
⇒ ⚖🗃🗃 🤵🤵 IPO → Special Purpose Acquisition Company (SPAC)
⇒ ⚖🗃🗃 🌐🌐 ADR/GDR: Shares in Videshi locker
⇒ 👻👻⚖🗃🗃 🌐🌐 ATMANIRBHAR reforms in ADR/GDR/BharatDR
⇒ 📈📈 SENSEX & Corona(उ�ेखनीय सं केतक/ सूचकांक)
⇒ 🐮🐮🐮🐮🐮🐮 SENSEX: Impact of Corona
⇒ 🐮🐮🐮🐮🐮🐮 Share Market: Impact of Bond Yield
⇒ 🐮🐮🐮🐮🐮🐮 Bond Vigilantism
⇒ 🗃🗃🗃🗃Securities and Exchange Board of India (SEBI)
⇒ 🗃🗃⚖📜📜Securities Market Code & Investor charter
⇒ 🛒🛒 (💻💻⏱:�) Algo Trading & Co-Location
⇒ 🛒🛒 (🔪🔪🔪🔪) Bond Market Reforms

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 50
⇒ 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Unified Bond Market (एक�कृ त बॉ� बाजार)
⇒ 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Deepening of G-Sec market- Direct Retail participation @RBI
⇒ 🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) Bond Buying Institution in 💼💼Budget-2021
⇒ 💍💍💍💍💍💍💍💍Commodity Market: Gold exchanges & 💼💼Budget-2021
⇒ 📦📦 � � Mutual fund → 🎛🎛 Mutual fund risk-o-meter
⇒ 🗃🗃🗃🗃: 🚛🚛🚛🚛🚛🚛 Bilateral Netting of Qualified Financial Contracts Act 2020
⇒ 🏙🏙🏙🏙 Corporate Governance: Budget-2021
⇒ 🏙🏙🏙🏙: Corporate Governance → LLP settlement Scheme 2020
⇒ 🏙🏙🏙🏙 Corporate Governance → OPC easier to setup & upgrade
⇒ 🏙🏙🏙🏙 Corporate Governance → Small Companies given compliance relief

14.2 🔪🔪🔪🔪⏰DEBT → SHORT TERM → FACTORING & TREDS

Suppose an MSME seller has sold cardboard boxes for jiophones to Mukesh Ambani but Mukesh
Ambani says he will pay the bill next month. Presently this is an unpaid invoices.

MSME seller can pledge this invoice to a factor (bank/NBFC) to avail loans. (छोटी कं प�नयां बड़ी कं प�नयों को
सामान और सेवा बेचती है उसका जो बकाया पैसा है उसके �बल को �गरवी रख के लघु अव�ध का कजर् ले आये)

Bill Discounting Factoring

MSME seller take the responsibility for Factor (bank/NBFC) takes on the responsibility
collecting payment of unpaid invoices by for the collection of ₹₹ from unpaid invoices
Ambani & delivers ₹ ₹ to the Factor from Ambani.
(bank/NBFC).

14.2.1 🔪🔪🔪🔪⏰Factoring Regulation (Amendment) Act, 2021

to amend the Factoring Regulation Act, 2011

Before
Banks and only “Factoring Companies
(NBFC)” allowed to give loans under this
system.
There were only seven NBFCs registered as
Factoring Companies.
-- earlier it was less.
-- earlier it was less.
Earlier this was not clear and so MSME could
commit fraud of “dual financing” i.e. Pledging
the same and per invoice as collateral in
multiple Bank/NBFCs.
After
Banks and all types of NBFCs allowed (After
registering with RBI). → So now more than
9000 NBFCs in India can give loans → this will
increase the availability of loans for the MSME.
RBI given more powers to regulate this
business.
More legal clarity about TReDS system.
Need to register the invoice-pledge-factoring-
loan transaction on A central registry set up
under the SARFAESI Act. This will prevent the
dual financing frauds.

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 51
14.2.2 🔪🔪🔪🔪⏰: 📡📡 TReDS platform to connect factoring-players.
⇒ Just like quickr/olx connect buyers with sellers, the Trade Receivables Electronic Discounting
System (TrEDS) online-platform Connect the factors (bank/NBFC) with the borrowers (MSME).
⇒ Examples of 3 TReDs platforms: M1xchange, RXIL, and A.TReDS. Have to register with RBI.
⇒ Most famous is RXIL - Owned by the Small Industries Development Bank of India (SIDBI) and
the National Stock Exchange of India Limited (NSE), State Bank, ICICI and Yes Bank .

14.2.3 🔪🔪🗃🗃 Bonds in News: 🚦🚦🚦🚦 Surety Bonds

⇒ Party#1-Builder/contractor pays fees/premium to party#2 insurance company → surety bond

issued. Party#1-builder/contractor gives this surety bond to party#3-Govt.
⇒ if the road contractor is not finishing project within prescribed time-limit/quality-limit →
Insurance company will pay ₹₹ to Govt.
⇒ Earlier, Insurance companies were not allowed to issue surety bonds in India.
⇒ So contractors had to submit ‘Bank Guarantees’ to Govt. But then 👜👜👜👜Budget-2022 said we’ll
allow Surety Bonds. IRDAI will regulate this.
⇒ 🤔🤔Sub-types of Surety Bonds: Bid Bonds, Performance Bonds, Advance Payment Bonds and
Retention Money Bonds. But we will not study them OR their internal
difference.⚾📻📻⚾🎓🎓✋

14.2.4 🔪🔪🗃🗃Bonds in News: Misc.

Formosa Bond is a bond issued in Taiwan, which is listed on the Taipei Exchange.
🈵🈵Formosa The bond is dominated by currencies other than the Taiwan dollar. 2022: SBI
Bond borrowed $300 million by issuing SBI Formosa Bonds - mostly for overseas branch
expansion. (ताइवान म� ताइवान के अलावा वाले मुद्रा म� जो बॉ� जारी िकए → फ़ोम�सा बोंड कहा जाता है.)
It is a sharia-compliant bond instruments used in Islamic finance. Was in News
☪Sukuk because Pakistan Govt issued such bonds. How it works? In which currency is it
Bond/Islamic
issued? How its different than ordinary bonds? ✋NOTIMP4Exam after looking at
Bond
old papers.
14.3 🗃🗃🗃🗃SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 52
⇒ भारतीय प्र�तभू�त और �व�नमय बोडर्, HQ- Mumbai
⇒ (1988) Formed by an executive order → (1992) Became Statutory Body → powers increased
through amendments in 1999 & 2014. Now it can order search and seizure, attachment of
properties, arrest and detention. (खोज अ�भग्रहण, सं प��यों क� ज�ी/कु क�, �गर�ारी और �नरोध)
⇒ SEBI Board Composition: Chairman + 1 officer from RBI + 2 officers from Union Government
+ 5 members appointed by Union Government.
⇒ Chairman: upto 5 years / 65 age. Reappointment possible.
⇒ 2022: Madhabi Puri Buch-first woman chairperson in history of SEBI. She replaced Ajay Tyagi
(Ex-IAS). Selection was done by Financial Sector Regulatory Appointments Search Committee
(FSRASC) headed by the Cabinet Secretary (IAS).

14.3.1 🤝🤝⏰T+1 Settlement instead of T+2

⇒ Badla System/Carry forward system: Buying of shares using borrowed money & making
promises to carry forward the settlement for upto 72 days. Scamsters misused (इसक� टोपी उसके सर पे:
सौदा आज करते लेिकन असल मे पैसों का भुगतान/शेयर क� िडलीवरी ७२ िदनो बाद होती- और इस के दौरान वही घपलेबाज उ�ी
शेयर बेचने क� टोपी दू सरों को पहेनाते रहेता)
⇒ so SEBI discontinued Badla System (in 2001) & introduced (T+2) rolling settlement system i.e.
after trade is conducted, the parties must settle it within two working days (= buyer pays money,
seller deliver shares/bonds/securities).
⇒ Settlement cycle represents the time period within which the stock exchanges have to settle
security transactions.
⇒ Until now we had T+2 days but from 2022: T+1 started.
⇒ T+1 means settlements will have to be cleared within one day of the actual transactions taking
place. (सौदा होने के एक िदन के भीतर ही पाट�ने पैसा चुकाना है और सामने वाली पाट� ने उसको शेयर क� िडलीवरी देनी है)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 53
⇒ Benefits? ⏬ Volatility, Speculation, Faster Release of shares/funds. HOW?NOTIMP.
(अ��रता,सट्टेबाज़ी)
⇒ 😰😰Foreign investors unhappy due to Time zone difference creating operational challenges.
(�वदेशी �नवेशक नाराज़ �ोंिक भारत म� जब सुबह होती है तो अमे�रका म� रात इस�लए एक िदन के भीतर सौदा समेटना उनके �लए
मु��ल!)

14.3.2 🐯🐯🛒🛒 (🔪🔪🔪🔪: 🧔🧔🧔) G-Sec Trading: RBI's NDS-OM, OTC

⇒ NDS system for recording the transactions of G-Sec buy-sell. NDS has following components:
i.e. buyer/seller call each other on the telephone, make the deal about buying and
Telephonic
selling and then inform the reserve bank's NDS system (ke we've done this deal).
Over-The- Buyer physically walks into the seller's office (or vice versa) and conducts the
Counter transaction. Later they report transactions to RBI's NDS System (ke we've done
(OTC) this deal). (ऑिफ़स म� �ब� �मलके ख़रीद-�बक्र� कर�ग,े बाद म� �रज़वर् ब�क को सू�चत कर�गे िक हमने ये िकया था)
Negotiated Dealing System-Order Matching system (NDS-OM): electronic,
computer screen based, anonymous, order driven trading system for dealing in
NDS-OM G-sec's secondary market. Buyer-seller places orders online without knowing
names/phone numbers of each other. (ख़रीददार और �वक्रेता एक दू सरे क� असली नाम पहचान नहीं
जान पाएं गे)
⇒ RBI owns and regulates Negotiated Dealing System (NDS) for trading in G-Sec.
⇒ Clearing Corporation of India Limited (CCIL owned by SBI, IDBI, ICICI, LIC etc) maintains this
system.

🚩🚩🚩FAQ: Then what is E-Kuber?

⇒ Ans. E-Kuber is the core banking solution (CBS: REF Pillar1A1) platform of RBI to digitally
handle all operations of RBI e.g. NEFT-RTGS, Repo, MSF, CRR, PSLC certificate trading, G-Sec,
Sovereign Gold Bond, Retail Direct Scheme (RDG) etc.
⇒ You may think of E-kuber as a Windows Operating system, & NDS as a sub-component/excel-
software inside of it that handles G-Sec buying-selling database management/account keeping.

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 54
🔠🔠❓MCQ. With reference to India, consider the following statements: (Asked in Prelims-2021)
1. Retail investors through demat account can invest in ‘Treasury Bills’ and ‘Government of India
Debt Bonds’ in primary market. [आम �नवेशक डीमैट खाते द्वारा प्राथ�मक बाजार म� सरकारी प्र�तभू�तयों म� �नवेश कर
सकता है]
2. ‘Negotiated Dealing System-Order Matching’ is a government securities trading platform of the
Reserve Bank of India. [NDS-OM सरकारी प्र�तभू�तयों म� खरीद �बक्र� करने के �लए �रजवर् ब�क द्वारा बनाया गया मं च है]
3. The ‘Central Depository Services Ltd.’ is jointly promoted by the Reserve Bank of India and the
Bombay Stock Exchange. [CDSL को �रजवर् ब�क और बॉ�े �ॉक ए�च�ज द्वारा सं यु� �प से बनाया गया था]
Which of the statements given below is/are correct?
a) 1 Only b) 1 and 2 c) 3 Only d) 2 and 3

14.3.3 🐮🐮📈📈🐻🐻Stockmarket IPO Bubble Burst: Case of Paytm (फू ट गया ग़ु�ारा, �नकल गयी हवा)
⇒ 📙📙📙📙ES22- 2021: more than 70 IPOs issued worth nearly ₹90,000 crores - this is higher than in
any year in last decade. More than 2 crore retail investors have open demat account in 2021.
⇒ 2021-Oct: Sensex and Nifty crossed 61,000 and 18,400 respectively on October 18, 2021.
⇒ However by 2022-March these stock indices have started to fall because of FPI-pullout-by-Fed
Tapering & Russia war.
⇒ 2021-Nov: Paytm collected ₹18,300 crore from IPO. (Company’s name is One 97
Communications, CEO Vijay Shekhar Sharma. Other partners-China’s Alibaba-Ant group (6%),
Japan's SoftBank and Warren Buffett's Berkshire Hathaway).
⇒ Stag (Male Deer) Investor - buys shares in IPO (initial public offering in the primary market)
with hopes of selling it at a very high price on LISTING in Secondary market. Often they get
lucky with almost 80-100% profit but their gameplan failed in Paytm. (नर-िहरन �नवेशक जो प्राथ�मक
बाज़ार म� IPO ख़रीदते और तुरंत उसे िद्वतीयक बाज़ार म� मुनाफ़े म� बेचने क� िफ़राक़ म� होते ह�)
⇒ 2021-Nov: Paytm Primary market Price Rs.2150 but but on day1 of listing (in the secondary
market), Paytm fell by almost 25%. → by 2022-March fallen to ₹750 (that is >60% loss to
investor!). CarTrade, Zomato etc also trading @loss. Reason?
⇒ 😥😥 General slowdown in the share market by fed tapering / FPI pullout (Ref:1a2), Russia-
Ukraine War.
⇒ 😥😥 high valuation of Paytm IPO (₹2150 per share) but institutional investors (Mutual Fund,
Pension Fund etc) not very confident of the growth prospects of Paytm. Once upon a time,
Paytm had superiority but faces stiff competition from NPCi’s UPI-Bhim, Mobikwick, PayU,
PhonePe etc. (ऑनलाइन भुगतान म� ब�त सारी कं प�नयों के साथ �धार्. पेटीएम का एका�धकार नहीं है.)
⇒ 😥😥startup bubble, no free lunches in economy- said Raghuram Rajan. Cashback discount is
given to build subscriber base to create hype- ultimately startup founders recovered all the
cashback money from Paytm retail investors (who lost 25% on listing day). → this could also
negatively affect the future IPOs of Startup Companies (अथर्तंत्र म� कोई मु� म� भोजन नहीं देता इन सब
�ाटर्अप वालों ने कै शबैक/ िड�ाउं ट के दम पे पहले ग्राहकों को लुभाया → िफर हमारी कं पनी म� ब�त ग्राहक है, एसा िदखाके
�नवेशकों को चूना लगाया)

Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 55
⇒ 😥😥Ethical Aspect:- Retail investors with huge greed were blindly applying IPOs hoping to 2x
double their money. At some point they were bound to pay for excess greed. (�बना मेहनत के 25 िदन म�
पैसे डबल करने क� लालच रखने वाले आम �नवेशकों ने भी अपने नै�तक मू�ों पर सोच �वचार करना चािहए- क� लालच बुरी बला है)

14.3.4 🐮🐮📈📈🐻🐻MSCI Emerging Market (EM) index

⇒ MSCI is a New York based company that publishes various type of stock index indicators.
⇒ Its MSCI Emerging Market (EM) index tracks equity (share) performance of 1400+ companies
in 25 emerging market countries including India.
⇒ 2022: Russian companies removed from this index (due to Ukraine war) → MSCI weightage
given to India⏫ → Western/foreign investors may bring more money towards Indian share
market in future.
⇒ 📙📙📙📙ES22 has also given big descriptions about how much weight is given to Indian companies
in this index & how rivers of milk and honey are flowing but I am not finding such technical
details very useful from exam point of view.

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Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 56
14.4.1 🔠🔠 Mock Questions for Prelims
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14.4.2 �🎺🎺🎺🎺1⃣✋ Mock Questions for UPSC Mains/GSM3 (250 words)

1) What is a Bad Bank? How does it help addressing the problem of large sized non performing
assets in the Indian banking system? बैड ब�क �ा है? यह भारतीय ब�िकंग प्रणाली म� बड़े आकार क� गैर-�न�ािदत
प�रसं प��यों क� सम�ा को दू र करने म� कै से मदद करता है?
2) Explain the significance of following reforms under the insolvency bankruptcy code: 1) Pre-
packaged Insolvency Resolution Process 2) Cross Border Insolvency. िदवा�लयापन सं िहता के तहत
�न��ल�खत सुधारों के मह� क� चचार् कर�: 1) पूवर्-पैक िदवा�लयापन समाधान प्रिक्रया 2) सीमा पार िदवा�लयापन।
3) "Faster completion of voluntary liquidation of companies for important for ease of doing
business and economic growth." Comment. "�ापार करने म� आसानी और आ�थक वृ�द्ध के �लए कं प�नयों के
�ै��क प�रसमापन को तेजी से �नपटाना मह�पूणर् है।" िट�णी करे .

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Mrunal’s Economy Win22 Series Pillar#1B & 1C: Banking & Sharemarket → Page 57